If 2011 was any indication, 2012 looks to be a year of international cooperation on tax standards. Despite some predictions for more isolationist policies, proposals for tax, trade and fiscal oversight point toward more cooperation between governments, not less.
Tax and Trade Agreements continue in Latin America
In November of 2011, officials from Mexico and several Central American countries, including El Salvador, Honduras, Nicaragua, Guatemala, and Costa Rica signed a free trade agreement multilaterally. The accord builds on some existing treaties, and must be ratified by all. It was recently approved by the Mexican Senate. For more information on the trade agreement click this document from the US Law Library of Congress here – English version and the decree from the Mexican Secretary of Foreign Affairs here- Spanish version.
Mexico also signed exchange of information agreements with the Cook Islands and the Cayman Islands at the end of 2011 according to the International Bureau of Fiscal Documentation (IBFD). This follows earlier tax information exchange agreements with the Bahamas and the Netherlands Antilles. On December 1st, 2011 Uruguay signed a number of tax information exchange agreements with Scandinavian and Northern European governments.
European sovereign debt crisis could drive dramatic tax change
On the European front, continued market uncertainty brought on by the sovereign debt crisis could bring about a fiscal union, and substantial tax policy implications. The European Council laid out intentions here for a European fiscal union in December. While specific tax policy changes aren’t mentioned per se, reform efforts would likely be part of a stabilized fiscal environment. This could include a standard financial transaction tax, and possible acceleration of the Common Consolidated Corporate Tax Base (CCCTB).
Notably, the trend is for further intergovernmental cooperation in both personal and corporate taxation. My prediction is that an increased focus on tax fairness, tax competitiveness, and transparency following the upheaval in banking will incentivize political bodies to capitalize on these trends.