5th December 2016
There can be no doubt now: the crackdown on tax havens has gone global. Latest reports have confirmed that by the end of 2016 a huge number of countries will have instructed financial services companies to begin collecting details ranging from bank balances, dividends and income from insurance products earned by clients living overseas.
A global commitment
Come September next year, this information will begin to be shared and processed worldwide, making it much easier for tax authorities to begin investigations into potential evasion. The aim is for this activity to force the hand of global tax havens and create a more transparent environment where there is quite simply nowhere to hide.
While there have been some who have used this opportunity to come clean, others continue to fight the system by attempting to find alternative loopholes. Indeed, there are suggestions that this growing clampdown on evasion will lead to an increase in the number of people relocating for tax purposes. However, even this is becoming more difficult, with some countries introducing exit taxes when people relocate, including the US, France, the Netherlands Japan and Canada. And who knows what impact Brexit will have on this freedom of movement for some.
If there is anyone still under the impression that there will always be an alternative route for tax evasion, the fact that two of arguably the most popular and well known tax havens – Panama and the Bahamas – are predicting a shift from offshore to onshore wealth management, should serve as a warning. For these well-known havens to join the fight against evasion truly does show that authorities across the globe are fully invested in finally drawing a line under this issue.
The impact on contractors
In this environment, contractors working across borders and recruiters placing them around the globe face a potential tax headache. In order to ensure you and your contractors remain compliant with local laws and avoid hefty fines or even criminal charges, partner with an expert today.