To date, 101 countries have agreed to release bank account information to tax authorities in other countries. Switzerland, Luxembourg, Britain, Germany, and the Cayman Islands are now on the OECD's Automatic Exchange Portal list.
In practice, the change will affect this year’s account information, although the actual receipt of information officially starts in 2017, with some countries slated to join the exchange in 2018.
In August 2016, 101 countries endorsed the Organisation for Economic Co-operation and Development's Automatic Exchange of Information portal. The OECD has published a list of participating countries.
On the list are several tax havens and countries known for shielding the secrecy of their clients' banking information such as Panama, the Cayman Islands, Luxembourg, Switzerland, Britain, and Germany. According to a 2015 investigation carried out by the Tax Justice Network, a Belgium-based non-profit advocacy group, those countries were among the top 20 nations which facilitate tax evasion.
What it means for Finnish residents
"This new exchange of information will focus on banks providing explanations of payments made to accounts and information on account balances at the end of year," says Kirsi Haapakoski, a Senior Advisor at the Finnish Tax Administration.
What information will be made available? "Information about the account, who owns it, and for example, dividends or interest payments that have been made to the account," she says.
This marks a significant change on behalf of the Tax Administration. Previously, the Tax Administration could only use the Tax and Information Exchange agreement to request information from specific counties if they suspected tax evasion.
According to Haapakoski, about 80 percent of tax returns filed in Finland that declare income received from abroad have been correctly filled in.
If the Finnish Tax Administration finds information about income that has not been declared, it first asks the tax payer for an explanation before it considers launching an investigation.