International Efforts to Prevent Tax Evasion and Corresponding Actions of Korean Government
Asian Tax Journal Vol. 11 No. 3 (2010), pp. 179-204
Abstract
As the number of global transactions increases, the amount of international money flows also increases accordingly. Though it is not possible to estimate the exact amount of evaded tax, it is believed that the amount is increasing due to the increase in international transactions. OECD and tax authorities of many countries are concerned about this problem and have discussed on ways to prevent tax evasions for many years. Especially OECD Global Forum, international dialogues between OECD member countries and non－member countries, has led the discussions in a way to coordinate various actions taken by different jurisdictions to suppress non－compliance behaviors for tax purposes. Many former tax haven countries have pledged to reform their tax systems or already implemented new tax systems equipped for higher transparency. Exchange of tax information between tax authorities is a very important tool in preventing tax evasion. OECD's recent works were focusing on this area and as a result, Article 26 of Model Tax Convention has been revised. The updated version of Article 26 makes the treaty partners cooperate to each other even in a case where such cooperation would not meet their own taxing interest. Furthermore, they cannot refuse a request for information simply because of the bank secrecy laws, etc. Korean government is also actively participating in the international efforts to prevent tax evasion. Korea has tax treaties or Tax Information Exchange Agreements with more than 80 countries. Additionally, Korean tax authority has set up a data base called International Consolidated Analysis System that is very useful to monitor the capital flows of international transactions. Although many countries, especially the former tax havens and the countries with bank secrecy laws, have pledged to satisfy OECD's transparency requirements, continuous international cooperation should be encouraged to a greater extent. Coordinated global pressure is expected to bring these countries on the level－playing field in real terms.
Keywords
- International Tax Evasion
- Article 26 of Model Tax Convention
- Tax Information Exchange Agreement
- OECD Global Forum
- International Consolidated Analysis System