18th November 2019
In matters of global tax, international authorities are more connected than ever. Whether it be through bodies like the Organisation for Economic Co-operation and Development (OECD), the European Union (EU), or legislation such as the Common Reporting Standard co-operation can be achieved much faster and efficiently.
One of the leading examples of co-operation is the J5, an organisation made up of tax enforcement authorities from the US, Australia, Canada, Netherlands and the United Kingdom. The organisation was formed in direct response to the OECD’s call to action for countries to do more to tackle the enablers of tax crime.
Earlier this month, the J5 met to discuss ways to deal with tax crimes, particularly involving cryptocurrency. Recruiters placing contractors internationally need to be aware of this joined-up approach by nations. So, how will the J5 tax and compliance crackdown affect recruitment?
The J5 tax and compliance crackdown – what should recruitment agencies know
The J5’s tax and compliance crackdown continued this month, with the commencement of the ‘The Challenge’, an event where tax authorities gather to discuss the latest methods of pursuing non-compliance. Last year, we reported to contractors and recruitment agencies about the success of the event, which took place at the Netherlands’ Fiscal Intelligence and Investigation Service in Amsterdam. This year, proceedings were hosted in Los Angeles. While last year’s meeting concentrated on enablers of tax evasion, this year focused on how to prevent fraud facilitated by cryptocurrency.
Experts from each country talked about ways to leverage open and investigative sources, including offshore account information. Using various analytical tools, members of each country split into teams with the goal of generating leads and finding tax offenders based on the new data available to them through The Challenge. Real data sets from each country were presented to make connections where current individual efforts were failing.
According to IRS Chief Don Fort, the event was a not just a hypothetical exercise, and will have real value in helping authorities crackdown on tax. Fort said that ‘the J5 is made up of the best and brightest of each country, so it makes sense to host events like The Challenge where we can get together and make real investigative strides. These are real investigators, using real data and finding real criminals.’
At the conclusion of The Challenge, each country’s tax investigators developed a number of leads, trends, and methodologies encompassing all of their regions. The information will now be used to advance existing and future investigations.
The activity of the J5 should be strong illustration to recruitment agencies of the joined-up nature of global tax compliance, and it is something we have commented on numerous times on this blog. However, it’s worth taking a closer look at the organisation to better understand the comprehensive nature of the global compliance crackdown.
According to its official website, to actively bring about change, the J5 intends to:
- Develop shared strategies to gather information and intelligence that will strengthen operational co-operation
- Drive strategies to conduct joint investigations and disrupt the activity of those who commit transnational tax crime
- Collaborate on effective communications that reinforce that J5 is working together to tackle transnational tax crime
To enhance existing investigation and intelligence programs, the J5 will:
- Identify significant targets for new investigation
- Improve the tactical intelligence threat picture now and into the future
- Lead the wider community in developing its understanding of the methods, weaknesses and risks from offshore tax crime
- Raise international awareness that the J5 is working together to reduce transnational tax crime, and create uncertainty for those who seek to commit offences
Recruiters need to be aware
Ultimately, recruitment agencies should be aware that the recent actions and successes of the J5 highlight just how committed authorities are to cracking down on tax and compliance. What this means for recruiters placing contractors overseas is that compliance should be treated with high priority. Unfortunately, with the introduction of the Criminal Finances Act 2017, agencies can be held liable for the action of one non-compliant contractor. Ignorance will not be accepted as a defence.
Therefore, we advise that firms doing business in international markets contact those who can navigate the complex world of international tax and compliance. By enlisting expert help, you can rest assured that this is being taken care of, allowing you to put all of your focus and energy towards placing candidates.
Contact us today.