Email this article Big Data, Automatic Exchange of Information and the Rights of Taxpayers
Abstract
In the last decade, a new form of exchange has been adopted—the automatic exchange of information (AEOI)—which is viewed as the new global standard. Never before has there been so much enthusiasm for tax administrations around the world to cooperate in the fight against tax evasion. In a very short amount of time, there has been a drastic move from the exchange of information (EOI) on request to spontaneous AEOI. The development of the Internet of Things (or IoT) has also brought about astounding changes to the way in which tax authorities around the world operate, and the use of big data by the tax administrations has come as no surprise.
While the previous focus may have been on determining taxpayers’ fair shares of tax, the current strategy focusses on tax transparency, where taxpayers’ information is shared with governments around the world. The sudden occurrence of scandals that resulted in the denouncement of major tax evasion schemes that started in 2008 with the fall of the Swiss bank UBS made a major contribution to the development of the new framework of EOI, which was endorsed by the Organisation for Economic Co-operation and Development (OECD) in its fight against harmful tax practices. With estimated losses in annual tax revenues due to tax evasion schemes totalling more than USD 100 billion (OECD, 2021a), it is unsurprising that governments around the globe have been motivated to adopt the new global standard.
The aim of this paper is to explore how the rights of taxpayers have been disregarded in the quest to find a potential solution to curb tax evasion. While AEOI and big data have proved to be effective tools for tax authorities, some concerns about the protection of the rights of taxpayers and taxpayers’ information arise as a result of their use. Accordingly, this paper has been divided into four main sections. After the introductory section, the different rights of taxpayers in the context of AEOI and big data are analysed. Section three delves into the current risks for taxpayers when their information is exchanged or processed on a large scale. Finally, section four includes recommendations about what can be done to ensure that the rights of taxpayers are respected in the context of AEOI and big data.
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