Offshore Assets - Using Intelligence to Combat tax Evasion

Technological advances and integrated financial markets have effectively removed all banking and business borders. Subject to anti-money laundering obligations, with just a click of a button you can now open an offshore bank account, set up an offshore company, trust or foundation. The increased recourse to offshore investments, with opaque structures based in other jurisdictions makes it very difficult for tax authorities to identify offshore assets. Furthermore, new emerging payment technologies such as, mobile banking, smart cards and Internet payment systems are also changing the environment in which businesses and individuals operate. This poses new challenges for tax administrations trying to identify tax evaders. eGovernment is central in assisting tax administrations in tackling this problem. To respond effectively to this new global environment in which we operate, tax administrations need to fully exploit technological advances and e-strategies: identifying and accessing new sources of information as well as effectively utilising information received. The collation of intelligence on offshore assets is an essential factor in the move towards a viable eGovernment strategy within revenue organisations in their efforts to tackle tax evasion. The interaction between government agencies internationally is essential to facilitate the move away from domestically orientated strategies towards a more integrated approach. To maximise the benefits and to minimise the duplication of effort, a centralised and coordinated approach is required to source and share new sources of information. The ability of tax auditors to access information: must no longer depend on proximity or geographical location, but ultimately upon the exchange of information between countries within the framework of Double Taxation Agreements (DTAs), Tax Information Exchange Agreements (TIEAs) and the links that have been established within the broader ICT sphere. This paper demonstrates the real and practical role that eGovernment has within the sphere of intelligence gathering and the detection and prevention of tax evasion using offshore assets. It sets out a practical guide to the information sources relating to offshore assets, which the Irish Revenue has identified to date. Furthermore this paper highlights, not just the efforts made but those that should be advanced ensuring that tax administrations keep abreast of new emerging payment technologies and identifying the potential compliance risks posed by them Finally it explores the feasibility of adopting a centralised and coordinated approach in the area of using intelligence to combat tax evasion.