Tax information exchange agreements do not work, says Christian Aid

By agency reporter
August 11, 2009

The UK government’s new tax deal with Liechtenstein amounts to a welcome admission that much-hyped tax information exchange agreements (TIEAs) do not work, Christian Aid says.

"The fact that the UK has signed two agreements today – a TIEA and a second one, ensuring that uncooperative UK taxpayers have their Liechtenstein accounts shut down - is a clear sign that TIEAs are almost impossible to use," comments Christian Aid Policy Manager, Alex Cobham.

The international churches' development and advocacy NGO's spokesperson adds: "They are extraordinarily bureaucratic and riddled with get-out clauses. If TIEAs were an effective way for tax authorities to combat tax dodging, then there would have been no need for the second agreement.

"Now that the UK has acknowledged that it needs more than a TIEA to crack down on its own tax dodgers, we hope it will apply the same logic to developing countries. Their tax authorities have far fewer resources than our own in the UK and are therefore even less able to use TIEAs to collect the revenues that are rightly theirs."

Christian Aid estimates that developing countries lose at least $160 billion a year to tax dodging by multinational companies alone.

Mr Cobham adds: "The G20 should now reflect this acceptance that TIEAs do not work by urgently bringing forward a new multilateral agreement on tax information sharing. Information must be exchanged automatically, to ensure that developing countries benefit."

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