A new tax authority has been formed to combat tax crime on an international basis.
The Joint Chiefs of Global Tax Enforcement, or J5, is made up of the tax authorities of Australia, Canada, the UK, the US, and the Netherlands.
The aim of the organisation is to share information and technology, conduct joint exercises, and generally collaborate in their investigations. The participants are doing this because they believe, according to the IRS website, that the act of hiding taxes offshore is harmful to both the economy and social fabric of society and must be stopped.
They pledge to work together to combat tax crime in all its forms, including cyber-crime and “the growing threat to tax administrations posed by cryptocurrencies”. Each member country has committed to dedicating one “full-time resource” to the group.
The first meeting was held last week, according to the Canada Revenue Agency. Attending were experts in financial crime from all five countries, who “developed tactical plans and identified opportunities to pursue cyber criminals.”
Why Crypto Payments Can Change the WorldGo to article >>
The J5 was formed by the Organisation for Economic Co-operation and Development, an organisation itself formed in 1961 to promote economic progress and world trade. As part of its tax guidelines, the primary right to tax a given entity belongs to that entity’s home country, rather than the country in which that entity is operating. In cases where the country of origin is first world and the host country third, an imbalance is often caused.
In their official statements, the regulators of both Holland and Canada mentioned cryptocurrency as a threat to tax law.
Johanne Charbonneau, Director General of the Canada Revenue Agency, said: “The formation of the J5 demonstrates the serious commitment of governments around the globe in enhancing international cooperation in fighting serious international tax and financial crimes, money laundering, and cybercrime through the use of cryptocurrencies.”
Hans van der Vlist, General Director of the Fiscale Inlichtingen- en Opsporingsdiens, said: “The unique thing about the J5 is the operational collaboration between five countries on tackling professional enablers that facilitate offshore tax crime, cybercrime and the threat of cryptocurrencies to tax administrations, as well as making best use of internationally available data and technology.”
The interest of the world’s tax authorities in digital currencies grew in tandem with those currencies’ values last year. Taxation is only very partial at the moment. Last year Australia actually scrapped a 10 percent goods and services tax that had been levied on Bitcoin. Israel, however, has declared cryptocurrency a taxable asset, and in April we reported on research that found that $25 billion was owed by cryptocurrency holders in the US alone – the biggest cryptocurrency exchange in that country was ordered to hand over the data of thousands of its customers in February.