A recent tax crackdown on Thursday, January 23rd, included intimidating letters sent to Australian clients. The clients all belong to a firm that was not named, but it is clear that this crackdown includes five countries.
The Day of Action
The tax authorities in the five participating countries referred to it as a “day of action.” This day of action included warning letters sent to clients in addition to demands for relevant information and raids. The day of action was led by the tax revenue authorities in the United States, the United Kingdom, Canada, Australia, and the Netherlands.
The Action Is Not Unexpected
The day of action did not come as a surprise to those who follow tax news or are familiar with the investigations the tax authorities in the relevant countries have been conducting. It was the result of multiple years of investigation into the unnamed financial institution.
This was the first step that the J5, Joint Chiefs of Global Tax Enforcement, took. The main task of the body, set up during the middle of 2018, is to fight money laundering and tax crime. It helps local revenue authorities.
The trigger behind this investigation was when the Netherlands Fiscal Information and Investigation Service obtained relevant information. That organization is not without controversy, as it has engaged in somewhat aggressive behavior. This includes the 2017 raids on the Swiss bank Credit Suisse, which resulted in the seizure of art, jewelry, gold bars, and millions of Euros of cash. Additionally, the Netherlands Fiscal Information and Investigation Service has taken measures that led to actions in the United Kingdom and Australia.
The Financial Company
The reports do not indicate which company was being investigated. However, it is clear that the company has its base in Central America and that it has thousands of worldwide clients.
The threatening letters and other steps taken on the “day of action” are based on the possibility that clients from this financial institution rely on a sophisticated system that transfers and conceals wealth anonymously. Their goals include not only evading tax obligations on funds but also to launder the money that they have gained from crimes. Those accusations are according to the joint statement that the J5 nations released.
Each member nation will continue the “day of action” with its own regulatory, criminal, and civil action.
The Australians Involved
The Australian Taxation Office (ATO) was involved in the “day of action.” The office used the investigative abilities and knowledge of the Australian Criminal Intelligence Commission. That commission can demand documents and question people under oath at secret hearings.
The Australian Taxation Office’s involvement specifically involved sending letters to some Australian clients of the relevant company. According to Tim Dyce, the ATO deputy commissioner, the messages would be unexpected to the recipients. In addition, the letters would be intimidating in nature, causing fear for some.
ATO plans to begin with just a few inquiries or intimidating letters. From there, the Australian Taxation Office will expand its investigation. Additionally, the office is encouraging people who are unsure whether they are affected to come forward and talk to them. The office says that coming forward will make the resolution less painful and quicker.
Unrelated to the Panama Papers
It is important to note that this current investigation and “day of action” are not at all related to the Panama Papers leak in 2016 or the Paradise Papers in 2017. However, those leaks did help prompt action among tax authorities as a way to reduce the amount of money that makes it to tax havens.
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