Protecting Taxpayer Privacy Rights Under Enhanced Cross-Border Tax Information Exchange: Toward a Multilateral Taxpayer Bill of Rights

Abstract

For a number of important policy reasons, tax authorities share information they collect about taxpayers with tax authorities from other countries. These tax authorities along with tax scholars generally recognize the need for enhanced cross-border tax information exchange (TIE) to assist with the enforcement of tax laws as well as for other reasons, but often disagree on the appropriate reform path. This Article deploys law and technology analysis to identify and discuss the challenges to taxpayer privacy rights and interests presented by TIE to see whether reform efforts are needed. In particular, taxpayer privacy appears to be challenged by the digitization of tax records, the maintenance of these records within databases and the transmission of the records across borders via information technology networks. The analysis suggests that effective TIE should be understood to consist of two discrete but related elements: efficient TIE (that is, rules and policies that promote low compliance costs for taxpayers and ease of administration and enforcement by tax authorities) and fair TIE (that is, rules and policies that respect the rights of taxpayers, including privacy rights). The main policy proposal is for governments to consider the development and negotiation of a multilateral taxpayer bill of rights. This international agreement could help to protect taxpayer privacy rights and thus encourage a more effective sharing of taxpayer information across borders by providing assurances to governments that the rights of their citizens and residents will be respected.

Keywords: tax, international tax, taxpayer information, law and technology, privacy