A flurry of deals to help in the pursuit of evaders hiding money offshore will be signed this week as finance ministers meet in Berlin tomorrow to review the international crackdown on tax havens.
More than 30 tax information exchange agreements have been signed since November, as offshore centres race to avoid sanctions.
The urgency of keeping up the pressure on remaining hold-outs will be discussed by ministers, along with the emergence of new offshore centres, such as Ghana. Although every jurisdiction involved in offshore finance has endorsed the internationally-agreed transparency standard, there are serious concerns over whether it will be implemented by certain territories, notably Panama.
The meeting, organised by the French and German finance ministries, has a symbolic importance because it will be attended by Hans-Rudolf Merz, Swiss finance minister.
The Swiss agreement to bow to international pressure in March was a crucial step in the international bid to end banking secrecy. Switzerland and the US last week announced they had completed a deal to exchange information on potential evaders, although it has yet to gain the backing of the Swiss parliament and could become the subject of a referendum.
The British Treasury, which is keen to expand the campaign against tax havens to embrace aggressive avoidance, as well as evasion, plans to voice support for a new move towards " country-by-country" reporting . It believes this additional reporting requirement for multinationals would bring more transparency into their negotiations with developing countries on transfer pricing, which determines the allocation of taxable profits between parts of a multinational.
The idea, which chimes with a growing focus on the role of evasion and avoidance in undermining development, is largely opposed by business, in part because of the compliance burden. Some development experts also question whether it is the right approach, given the more fundamental problems facing some tax administrations in developing countries.
A hard-hitting critique of existing research on the issue will be published tomorrow by the UK's Department for International Development. The study by the Oxford University Centre for Business Taxation says tax losses due to profit-shifting by multinationals have been "overestimated drastically".
It also criticises estimates of tax evasion by wealthy individuals in developing countries, which some reports have put as high as $124bn a year. It said: "Overall, it is fair to conclude that most existing estimates of tax revenue losses in developing countries due to evasion and avoidance are not based on reliable methods and data."
They also question the view that tax evasion is the prime motivation for money being shifted out of developing countries, saying political instability and concerns about property rights may be more important. But they support the calls for more transparency and say evasion and profit shifting are likely to be significant problems.
The department commissioned the work because it wanted a better understanding of evasion to ensure its aid was used effectively. It said the Oxford study was a useful first step, pointing to the need for more research.