The TIEA was signed on October 29 in London by BVI Premier Ralph O’Neal, and Gillian Merron, UK Parliamentary Under-Secretary of State at the Foreign & Commonwealth Office in the presence of officials from the UK and the BVI.

The TIEA provides for exchange of information on request relating to a specific criminal or civil tax matter under investigation. This Agreement builds upon legislation in both jurisdictions which already provides for mutual legal assistance in criminal matters. The TIEA reflects both Governments’ shared commitment to implement the Organisation for Economic Cooperation and Development's principles of transparency and effective exchange of information.

In addition to the TIEA, BVI and the United Kingdom have signed an agreement for the avoidance of double taxation with respect to taxes on income, which will provide benefits to BVI and UK residents. Both Governments have also stated that neither party has any intention of introducing any discriminatory, prejudicial or restrictive measures based on harmful tax practices while the TIEA is in force.

In response to the signing of the TIEA, O’Neal said: “The conclusion of this TIEA demonstrates the commitment of both the BVI and the United Kingdom governments to international co-operation in transparency and exchange of information. We welcome HM Treasury’s acknowledgement of BVI's leadership role in global tax standards and our reputation for good governance in financial matters. As is recognised in the TIEA, both governments have long been active in international efforts in the fight against financial and other crimes. The BVI will continue to foster and develop international best practice in all areas of financial regulation.”

He added: “In addition to the TIEA, we have also successfully negotiated a declaration of intent for non-discriminatory tax treatment and a double taxation agreement covering taxes on income for pensioners, students and government employees.”

This is the third TIEA signed by the BVI. A TIEA was signed with Australia on October 27, and with the USA in 2002. The UK government signed a TIEA with the Isle of Man in 2008 and Bermuda in 2007.

The tax agreements between the BVI and the UK will enter into force as soon as both governments have completed the legislative procedures needed to give them effect.

A BVI government delegation is currently in London taking part in the Overseas Territories Consultative Council, which includes meetings with the Foreign and Commonwealth Office (FCO). Government delegations from several other British offshore territories in the Caribbean are also attending these talks, and it is likely that the UK will sign tax agreements with some of these jurisdictions in due course.

The UK government has come under increasing pressure to enforce stricter levels of transparency in some of the 14 Overseas Territories still under British sovereignty following the publication of parliamentary reports earlier this year that accused the FCO of complacency in the monitoring of tax evasion and money laundering risks in certain offshore financial centres. The conference is also being staged at a time when the OECD is preparing to ramp up its efforts to crack down on offshore and low-tax financial centres which are still deemed to be "uncooperative," as part of plans by its member governments to further strengthen regulatory safeguards in the global financial system.

According to Edward Leigh, Chairman of the House of Commons Committee of Public Accounts, which published one of the parliamentary reports in May, the standards of regulation across areas such as banking, money laundering, insurance and securities "are not as good as those in the Crown Dependencies (Jersey, Guernsey and the Isle of Man)."

The BVI, the Cayman Islands and other offshore centres hotly disputed these claims in submissions to an inquiry launched by the Commons Treasury Select Committee the previous month, arguing that they have brought their regulatory standards up to the levels required by the OECD's Financial Action Task Force (FATF).

"Often the claim is unfairly made that the so-called offshore centres are not properly regulated and are a haven for tax evasion, money laundering and terrorist financing," the BVI government told the Commons Select Committee on Foreign Affairs, which also studied the issue earlier this year.

"These claims are mostly made by those in the developed world with whom we are in material competition for business and too often no effort is made to give recognition to the regulatory advances of such jurisdictions as the BVI," the territory's government argued.

Similarly, the Leader of Government Business in the Cayman Islands told the committee that the territory had "a very strong compliance culture, underpinned by modern legislation, which complied with international best practice," and emphasised the Cayman Islands Monetary Authority's independence from government.