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NEW DELHI: The OECD on Friday released a possible framework for enhancing tax transparency in real estate, which is seen as a source of leakage and money laundering, and also allow for sharing of tax-related information received from other countries for “non-tax purposes”.
The two recommendations in the report released by the Centre for Tax Policy of the Paris-based agency for G20 leaders, who are meeting here, came at the behest of India, which is looking at ways to tighten norms to plug evasion.
“There are indications that investments in cross-border real estate may be used to shelter undeclared assets that otherwise would have been subject to CRS (global common reporting standard). Other studies have shown that cross-border real estate holdings are frequently under-reported, posing risks that taxes due in connection with real estate remain unpaid,” it said.
While tax authorities have limited access to data on cross-border ownership of real estate and income, the proportion of property owned by a non-resident is estimated to have increased in recent years.
Data gathered by the Financial Action Task Force (FATF) indicated that across 32 members of the global anti-money laundering watchdog, 69% identified the real estate sector as posing a significant risk for money laundering activities. This was done through complex ownership structures to hide identities, as well as false or zero declaration of the assets, the report said, while advocating a whole-of-government approach and sharing of information with tax authorities.
It pointed to steps taken by the European Union and the US to gather more information – which is seen to be the biggest gap – but proposed a different framework that deals not only with domestic but global information.
Separately, it said information exchanged for tax purposes (EOI) could significantly assist investigations carried out by other non-tax law enforcement authorities, such as anti-money laundering and countering the financing of terrorism (AML/CFT), anti-corruption, prosecution and customs authorities. An Indian government official said that current rules do not allow authorities to use tax data to be used to recover dues from, say, an asset that the evader has. But information sharing for non-tax purposes will help recovery.
The two recommendations in the report released by the Centre for Tax Policy of the Paris-based agency for G20 leaders, who are meeting here, came at the behest of India, which is looking at ways to tighten norms to plug evasion.
“There are indications that investments in cross-border real estate may be used to shelter undeclared assets that otherwise would have been subject to CRS (global common reporting standard). Other studies have shown that cross-border real estate holdings are frequently under-reported, posing risks that taxes due in connection with real estate remain unpaid,” it said.
While tax authorities have limited access to data on cross-border ownership of real estate and income, the proportion of property owned by a non-resident is estimated to have increased in recent years.
Data gathered by the Financial Action Task Force (FATF) indicated that across 32 members of the global anti-money laundering watchdog, 69% identified the real estate sector as posing a significant risk for money laundering activities. This was done through complex ownership structures to hide identities, as well as false or zero declaration of the assets, the report said, while advocating a whole-of-government approach and sharing of information with tax authorities.
It pointed to steps taken by the European Union and the US to gather more information – which is seen to be the biggest gap – but proposed a different framework that deals not only with domestic but global information.
Separately, it said information exchanged for tax purposes (EOI) could significantly assist investigations carried out by other non-tax law enforcement authorities, such as anti-money laundering and countering the financing of terrorism (AML/CFT), anti-corruption, prosecution and customs authorities. An Indian government official said that current rules do not allow authorities to use tax data to be used to recover dues from, say, an asset that the evader has. But information sharing for non-tax purposes will help recovery.
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