"The era of banking secrecy is over."
– Angel Gurria, Secretary-General of the OECD
"HNWIs who take compliance seriously have much to gain from the new environment. Below are steps to consider in the new tax era."
It is the world's wealthiest individuals who are seen as a lucrative target for tax increases and ensuring that HNWIs pay their 'fair share' of tax has a number of advantages for governments seeking to increase overall revenues.
Both offshore and onshore financial centers have committed to international standards on transparency; jurisdictions that were once described as uncooperative tax havens have opened their doors to external scrutiny and have received the blessing of the OECD as a result. And governments have applied increasingly stringent measures on banks to disclose information about accounts that are held offshore.
As Angel Gurria, Secretary-General of the OECD, remarked in a June 2009 statement, "the era of banking secrecy is over."
Structures that may have been tolerated five years ago may now be unacceptable, and action in that regard requires a sense of urgency on the part of the taxpayer. The risks of non-compliance — and of ensuing penalties, investigations or legal action — have never been greater.
Yet at the same time, HNWIs who take compliance seriously have much to gain from the new environment.
HNWIs need to adjust to this rapidly changing tax administrative environment
Critical action steps HNWIs must consider include:
- Conduct a tax compliance and risk assessment for your current world-wide tax situation
- Develop or assess your "tax philosophy" to make sure that the tax positions taken with respect to tax uncertainties are consistent with your level of risk tolerance
- Stay abreast of potential tax legislative and policy changes in the countries in which you reside, conduct business or make investments and maintain the flexibility to adjust to the changing tax environment in those locales.
- Evaluate your overall global tax position both from a personal and business perspective so that your global tax obligations are reduced as appropriate and situations which may give rise to double taxation are avoided
- Develop a team of advisors with the competence, breadth of capabilities, geographic reach and knowledge of tax administration focus areas to match your personal, business, investment planning and tax compliance and reporting needs.