Tracing Trails: Implications of Tax Information Exchange Programs for Customs Administrations

Abstract

The G20 recently agreed to adopt multilateral automatic tax information exchange as a global standard in the fight against cross-border tax fraud and evasion. The Organization for Economic Cooperation and Development (OECD) has, since the late 1980s, promoted tax information exchange between tax authorities to help its member states identify residents’ incomes and assets contained in tax havens. The global customs community could benefit from a similar type of endeavour as crossborder trade on which customs administrations impose levies is as susceptible to tax evasion as other cross-border economic activities. Additionally, revenue generated by customs administrations accounts for a considerable share of government tax revenue. The World Customs Organization (WCO) has developed a variety of instruments and tools dealing with the exchange of customs information for its Members. Customs administrations hoping to enhance the exchange of customs information can focus on identifying trails that trade transactions leave not only in export countries and other competing import countries but also in the trade payment process.