Concerns Increasing for Data Security

August 20, 2010 International Tax Cooperation

DataGreater attention needs to be paid to data security protocols employed by businesses and Governments, in order to ensure confidentiality and continued privacy.

Corporations’ concerns for the safety and security of their private data and files are rising, amidst a continuing slew of cases of data theft, information loss and abuse. The issue was recently brought into media spotlight after a former supply chain executive for the international electronics firm Apple allegedly received USD 1 million in return for offering company data to competitors. The ex-employee, Paul Devine, is claimed to have transferred files and information readily available from his computer system to several electronic equipment suppliers and manufacturers in Asia.

While technical analysts praised Apple for quickly discovering the sale of information, they warned that greater measures could have been instated to prevent the incident entirely. Tony Bradley, contributor to PCWorld, claimed that several software packages could have deterred unsolicited communications or even monitored Paul Devine’s computer. Additionally, as the data was physically located on the defendant’s computer, the sale could have been hindered by use of in-firm remote data hosting.

It has also become evident that adequate data protection measures should be extended beyond internal corporate structures. With over 300 bilateral Tax Information Exchange Agreements (TIEA) already signed across the world, concerns have been raised about the handling of taxpayer data in nations with low standards of anti-corruption legislation, or lenient laws on computer hardware and data seizures.

The problem has recently been highlighted by revelations of numerous tax and government authorities worldwide repeatedly poorly implementing taxpayers’ privacy measures. In 2008 the UK’s HM Revenue and Customs (HMRC) infamously lost personal tax information on 12 million individuals, after a memory stick with taxpayers’ details was misplaced in a bar by a HMRC staff-member. In July 2010, the international consultancy firm KPMG revealed that the Indian Government experienced 570 cases of internal data-loss in 2009, possibly affecting 220 million tax payers. Further, in June 2010 it was shown by the Australian National Audit Office that the Australian Tax Office’s routinely holds excessive corporate and personal data attained through audits, investigations and anonymous tips, even in cases where no wrong doing was proven. Similarly, many Governments retain information gathered through raids on suspected tax evaders, even if ultimately proven not guilty of financial discretion.

Photo by Studio Antwan