Research On Implementation Of Automatic Exchange Of Tax Information Standard

Economic globalization has made cross-border activities more and more frequent,becoming a normal phenomenon.The problem is that cross-border investors began to use the differences and opacity of national tax systems to evade their tax liabilities.So over the years,the international community has always called for more effective measures to deal with international tax evasion and tax avoidance,and ensure that taxpayers pay correct amount of taxes to their resident or source countries.It needs joint efforts of national tax authorities to strengthen cooperation to meet the challenge,automatic exchange of information between tax authorities is considered to be one of the most important and effective ways of preventing illegal capital flows.Finally it got the support of G20.In April 2013,the G20 Finance Minister and the Governor of the Central Bank approved automatic exchange of tax information as a new global standard.Up to now,most countries,including China,have committed or implemented Automatic Exchange of Tax Information Standard,and even tax havens known as strict bank secrecy systems are no exception.Automatic exchange of information will strengthen the cross-border powers of tax authorities,and they can obtain more sensitive information and commercial secrets of taxpayers.This article argues that strengthening the confidentiality of information from international and domestic levels,more emphasizing protection in advance,not limited to afterwards relief.At the same time,we should be aware of the principle of proportionality,and can not interfere with taxpayers’ privacy information without limit,causing excessive collection of information.Undisclosed or untaxed income of the past discovered in the process of exchanging of tax information,this article proposes a tax amnesty system.From these aspects of voluntary nature of the disclosure,completeness of disclosure and limited participation it analyzes the requirement of introducing a tax amnesty system.It also discusses some of considerations for implementing the tax amnesty system in China according to China’s specific situation.After the implementation of Automatic Exchange of Tax Information Standard,there is a phenomenon that some taxpayers change or create new tax resident status to circumvent Common Reporting Standard(hereinafter referred to as "CRS")reporting obligations through some Residence by Investment Schemes.In view of this loophole,this article believes that we can refer to the recommendations of the Organisation for Economic Co-operation and Development(hereinafter referred to as "OECD")to identify the types of schemes that present a high risk of abuse and remind stakeholders of the importance of correctly applying relevant CRS due diligence procedures.The importance of information for tax authorities is self-evident,but the tax-related information sharing path is not smooth in China.The exchange of information with third-party is obviously insufficient.This article believes that an appropriate third-party information reporting system should be established,at the same time,building a unified information processing system to improve the ability of handling information and the value of information.In addition,the implementation of the new standard requires the improvement of domestic relevant laws and regulations.However,China’s current legislation on exchange of information lags behind international development.This article argues that relevant legislation must be promptly improved to provide a clear legal basis for China’s implementation of Automatic Exchange of Tax Information Standard,making it meet the requirements of the international standard.Without a reasonable punishment mechanism,it is impossible to ensure the effective implementation of the standard.However,in view of China’s relevant laws and regulations,it lacks an effective punishment mechanism.This article believes that we can learn from outside experiences and practices to strengthen penalties of financial institutions,and establish the penalty mechanism to match the false declaration behavior of account holders,so as to achieve the optimal implementation effect of the new standard.