Legislation

Australia: Tax office announces initiative to promote disclosure of offshore income

In late March, the Australian Tax Office ("ATO") announced "Project DO IT", an initiative to encourage taxpayers to voluntarily disclose income earned offshore or through controlled offshore entities that they should have declared.

According to the ATO, unreported offshore income includes, but is not limited to:

  • "foreign income or a transaction with an offshore structure”;
  • "deductions relating to foreign income that have been claimed incorrectly";
  • "capital gains in respect of foreign assets or Australian assets transferred offshore"; and
  • "income from an offshore entity that is taxable in [a taxpayer's] hands".

Individuals and corporate entities are eligible to make a disclosure unless an exclusion condition applies (which apply generally where a taxpayer is under audit or criminal investigation, has been involved in promoting or marketing a tax evasion scheme, or derived foreign assets or income from a criminal activity). As a condition of participation in the initiative, taxpayers must bring relevant offshore structures within the Australian tax system and undertake to report income appropriately in the future.

If a voluntary disclosure is accepted by the ATO, an individual may receive various significant benefits. For example, the ATO will:

  • only assess tax for years in respect of which a time limit for amending a tax return has not yet expired (generally, the past four tax years);
  • not form an opinion that there has been fraud or evasion, investigate the voluntary disclosure in order to prosecute the taxpayer, or voluntarily refer the matter to another enforcement agency;
  • significantly reduce the associated tax shortfall penalty; and
  • provide assurances as to the tax effects of bringing a relevant offshore structure within the Australian tax system.

Spain: Spanish courts now able to pursue corruption committed abroad

Since 15 March 2014, as a result of an amendment to Spain’s law on judicial powers (Ley 1/2014 de 13 de marzo, de modificación de la Ley Orgánica del Poder Judicial), Spanish courts have been able to hear cases of corruption by individuals and bribery in international business transactions committed by both Spaniards and foreigners, outside Spain.

This reform was aimed at meeting the obligations imposed by international treaties that Spain has ratified, including the OECD Anti-Bribery Convention. Although the prosecution of the corruption of foreign public officials was already possible under Spain’s Criminal Code (Código Penal), the jurisdictional aspects remained outstanding. These have now been finalised by the latest reforms.

Under the new regulations, it is only necessary for any one of the following conditions to be fulfilled for Spanish courts to have jurisdiction to investigate and pursue cases of corruption outside Spain:

  • The allegations are made against a Spanish citizen;
  • The allegations are made against a foreigner whose habitual residence is in Spain;
  • The alleged crime was committed by a manager, employee or business partner of a company or organisation whose registered office or headquarters is in Spain; or
  • The alleged crime was committed by a company or organisation whose registered office or headquarters is in Spain.

However, Spanish lawmakers have made it clear that crimes outside Spain should only be pursued on an exceptional basis. Such actions will therefore only be justified where a complaint has been filed by the victim or the Spanish public prosecutor.

Moreover, Spanish courts will not have jurisdiction where proceedings have already been brought in an international court, in the jurisdiction where the crime was committed or in the country of origin of the person charged with the offence. In the last two cases, this is provided that those persons are not in Spain or, if they are, that they will be extradited to another country or transferred to an international court. If the state exercising that jurisdiction is not willing to investigate the case or is not realistically capable of doing so, Spanish courts will still be able to exercise their jurisdiction.