A comparative study of the exchange of information to enhance tax transparency in the United States of America, the United Kingdom and South Africa

Abstract

The 2008 financial crisis shifted the focus of governments and their tax authorities and led to efforts to prevent base erosion and profit shifting through ‘tax transparency’. As a result, tax authorities are marking their territories and exhibiting determination to identify perpetrators who are seen to be benefiting from profits being shifted with the sole intention of avoiding, evading or even reducing their tax liability. Organisations such as the OECD, governments and tax authorities have come together to combat the erosion caused by gaps that had been identified and used by taxpayers to their advantage. This has led to the drafting and implementation of legislation and standards, the signing of financial and tax information exchange agreements between countries, and an emphasis on the disclosing of information in reports, such as country-by-country reports or reports provided directly to tax authorities. The aim of this study was to review the available literature on three precise techniques that can be used to aid the exchange of information; to identify the similarities and/or differences between the way in which these techniques are applied in the USA, the UK and SA; and to conclude on whether the methods that have been implemented to in fact enhance tax transparency in the USA, the UK or SA in any way, shape or form.