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International Tax Shelter Task Force To Expand

by Robert Lee,, London

25 May 2007

The Commissioners of the Australian, Canadian, UK and US tax administrations have announced plans to open a second Joint International Tax Shelter Information Centre (JITSIC) office in London UK, in Spring 2007.

Japan has also accepted an invitation to join JITSIC, and a representative of the National Tax Agency will join the London office.

The Commissioners agreed that exchanging information in real-time is making a big difference to the complex task of tracking tax avoidance and abusive cross-border transactions.

JITSIC members have identified and challenged highly artificial arrangements including:

  • a scheme marketed cross-border, involving hundreds of taxpayers and tens of millions of dollars in improper deductions and unreported income from retirement account withdrawals
  • financial institutions creating financing structures selling the benefit of foreign tax credits separate from the economic benefit of the underlying income, and
  • brokers providing made to order losses on futures and options transactions for individuals in other JITSIC jurisdictions, leading to a tax loss of over one hundred million dollars.

The Commissioners have also made plans for the future development of JITSIC, along with measured expansion to cover Asia in addition to North America and Europe.

This will broaden the focus of its activities, further sharing best practice on risk assessment and other key areas of interest, particularly increasing the transparency of cross-border transactions in order to create a level playing field for taxpayers who voluntarily comply with their tax obligations.

JITSIC was established in 2004 by the tax administrations of Australia, Canada, the United Kingdom and the United States, to supplement their ongoing work in identifying and curbing tax avoidance and shelters and those who promote them and invest in them.

To date, delegates from each of the four countries have been based in Washington DC, and exchange information on abusive tax schemes, their promoters and investors, consistent with the provisions of bilateral tax conventions.

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