Chinese Tax Law and Deutsche Bank Raid – The World Keeps Moving Towards Transparency

Last week, Deutsche Bank was raided in an investigation linked to the Panama Papers.  The Panama Papers were a set of leaked documents that contained information on extensive money laundering and tax fraud.  The raid did involve possible business transactions through tax havens, but also strongly revolved around money laundering.

In our experience, the global trend towards transparency in many countries is centered on money laundering more so than tax crimes.  This may be because the U.S. is one of the only countries that taxes based on citizenship rather than residency, giving the U.S. more of a need to follow banking and business in foreign countries.  However, this new focus on money laundering, as well as the implementation of CRS, has ushered in a new era.  With more countries focused on transparency, whether that be for money laundering or any other reason, the U.S. is bound to gain valuable information on U.S. taxpayers with tax violations.  Furthermore, many countries are moving towards a tax system that more closely resembles the U.S., most notably China which recently implemented new global taxation and reporting policies that closely mimic that of the U.S.

The final takeaway – the issue of tax non-compliance is not going away, and the walls are closing in from every angle.  Despite the end of OVDP, it is still imperative taxpayers take corrective action to fix any non-compliance with their U.S. taxes.  We have assisted taxpayers working with their banks as part of U.S. Department of Justice negotiations during these investigations.  If the taxpayer has already resolved the issue, it is a much easier and much less stressful process.

Many people had hoped that FATCA and global reporting was going to scale back in the face of much opposition, but instead the world is catching up to the U.S. standard.  If the implementation of CRS wasn’t a big enough sign of this change, raids like this one at Deutsche Bank and China’s new tax system should begin to open more eyes.

Disclaimer: Hone Maxwell LLP articles and blogs are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.

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