How does Information Exchange help to combat international tax avoidance?
Information exchange is an effective mechanism for combating international tax avoidance. This is because it requires countries to exchange information about the financial activities of their citizens in different countries. This makes it harder for individuals and companies to hide their income and assets in offshore accounts or to use tax havens to avoid paying taxes. The Organization for Economic Cooperation and Development (OECD) has developed an international standard for information exchange for tax purposes. This sets out rules on how countries should exchange information about the activities of citizens in different countries. The ultimate goal of this standard is to ensure that individuals and companies are paying their fair share of taxes in the jurisdiction where the income was generated. In Hawaii, the State Department of Taxation has recently signed an agreement with the United States Internal Revenue Service (IRS). This agreement means that Hawaii can now access IRS data to help combat international tax evasion. This agreement also allows the IRS to access data from Hawaii, which can be useful in identifying taxpayers who are trying to hide assets offshore. Overall, information exchange is an important tool for combating international tax avoidance. By sharing information between countries, tax authorities are better equipped to identify and track down individuals and companies who are evading taxes. This helps to ensure that everyone pays their fair share.
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