International exchange of tax information within the framework of BEPS. Globalization, which has marked the 21st century, has revealed many problems of some separate states.
Moreover, one of the most important and significant was the problem of creating so-called offshore holes, where significant financial assets can be hidden, regardless of their origin.
First time they thought about it during an investigation into the financing of terrorist acts in New York was conducted.
However, in addition to sources of financial support for terrorist operations, such offshore havens also hid the capital of those individuals who evaded taxes in their countries, as well as the savings of criminals, persons with significant political and social influence, and corrupt officials.
As a result, a strategy to combat tax evasion was developed, which became known as BEPS. To eliminate the BEPS problem, a standard was created, according to which the automatic exchange of information regarding the payment of taxes between states is provided.
Countries that provide tax credits and establish a zero tax rate have been included in such exchanges in a special way.
The exchange of information on taxes, carried out at the international level, has significantly increased the transparency of the global economy for tax control authorities.
However, this concept also has a downside. Where the overall tax burden on financial assets increases, the activity of entrepreneurs and investors is significantly reduced.
As a result, if the above risks are realized, we can expect a decrease in the rate of global economic growth.
The following information is sent
The information is received at the end of the year following the reporting year.
It means that the verification of data will only begin at the beginning of the annual period that follows the year following the reporting one: the verification of information in 2019 will be carried out at the beginning of 2021.
For legal entities, it will be mainly checked whether you, as the owner of a company abroad, from paying taxes or not.
It is also necessary to submit to the tax return the opinion of independent auditors on the results of the business activity of your company, or, for those countries in which an annual audit is not mandatory, only a financial report.
However, the FTS prefers to request exactly the opinion of the auditors, so we recommend preparing it in advance.
In addition, you may be required for an account statement in a foreign bank in order to check whether all transactions comply with foreign exchange controls. It also depends on what turnovers and balances you have at the end of the reporting period.
If you have the opportunity not to get into the automatic exchange of tax data, use this chance. How can you did it?
The above methods are the most effective and simplest methods to avoid getting into automatic exchange.
The accounting department of the company must compile quarterly, annual financial reports and provide declarations to the tax service. Contact us for more information.