The OECD (Organisation for Economic Co-operation and Development) designed the Tax Information Exchange Agreement (TIEA) to enable high tax countries to request information from foreign banks about clients who are suspected of holding funds away from their country’s banking system. Many people will worry about the possible existence of a TIEA between your country of residence and an offshore banking country; so we will explain more about the TIEA.
The first important fact to know is that the country making the TIEA request must have evidence which links an offshore account to a tax resident of the requesting country. Basically, this means there must be evidence linking the offshore bank to the onshore account of the tax resident; for example: transfers, frequent debit card usage, corporation documents, banking forms or access to an offshore bank’s website’s online banking page, etc.
Unnamed debit cards are much more difficult to track, especially if they are from non tax havens and coded as gift cards. It is also important not to use an offshore issued card at the same shops and ATMs on a regular basis, as this could indicate that the card holder is not an overseas visitor, but a local tax resident. If a pattern is established, this can be grounds for a TIEA request, as the ATM will record the card’s country of issue.
It is also important to note that a TIEA request is not free; the requesting country has to pay. For this reason, countries may be more careful who they choose to investigate. According to the tax justice network, this payment requirement is the main reason for the comparatively small number of requests. The number of TIEA requests is typically less than 100 per year, even in popular tax havens.
Recent significant changes have taken place, affecting requests for information that are made with little information or evidence to support this request, known metaphorically as fishing expeditions. The main difference is that now the country receiving the request should provide any evidence, regardless of whether it seems to be tax related or not. Of course, the country receiving the request must also adhere to its own rules and regulations and could find that there are insufficient grounds to provide the information.
Privacy, preparation and discretion are essential factors to avoid a TIEA request.TIEA Overview