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Tax Information Exchange Agreements
In
December, 2005, Bermuda's House of Assembly voted
to approve new legislation facilitating the exchange
of tax information with other nations in a bid to
cooperate in the stamping out of international tax
evasion.
The
International Cooperation (Tax Information Exchange
Agreements) Act 2005, is umbrella legislation to give
effect to Tax Information Exchange Agreements with
countries in the OECD and the European Union.
The
bill came hot on the heels of Bermuda's sealing of
a TIEA with Australia, which was signed by Paula Cox
and then Australian Treasurer Peter Costello in Washington,
DC in November.
According
to Cox, tax exchange agreements would not only distance
Bermuda from its old "tax haven" label,
but also boost trade in financial services and improve
commercial relations.
"As
such it is important to our national economic interest
that Bermuda directly negotiates with such countries,"
she stated.
Ms
Cox revealed that Bermuda was negotiating with the
UK towards the completion of an updated TIEA and was
also in diplomatic contact with Mexico.
According
to Ms Cox, the Australian agreement marked the first
treaty that Bermuda had entered into following a commitment
to ban harmful tax practices five years previously.
However,
since Bermuda does not have an income tax, and therefore
does not stand to directly gain from an exchange of
tax information, Mrs Cox indicated that the Bermudian
government pushed for additional clauses that would
result in a "measurable and reciprocal"
benefit for the island, such as closer commercial
relations between the two countries.
According
to Mr Costello, the agreement would not only provide
for full exchange of information on criminal and civil
matters between Australia and Bermuda, but also boost
economic ties between the two.
"These
agreements are an essential tool in Australia's efforts
to reduce offshore tax evasion," Costello explained
in a statement.
In
December 2007, the UK and Bermuda finally this week
exchanged letters setting up an arrangement for the
exchange of tax information, which follwed tree years
of discussions between the two governments.
The
agreement commits the UK government to be able to
obtain requested information from banks and trustees,
regardless of whether any crime has been committed,
and without the knowledge of the subject of an investigation
or any requirement for a court order.
This
was the first such arrangement entered into by the
United Kingdom and the third concluded by Bermuda.
The arrangement, says the OECD, confirms Bermuda’s
commitment to high international standards and its
stature as a responsible international financial centre.
In
a press release from HM Revenue & Customs, the
Financial Secretary to the Treasury, Jane Kennedy
welcomed the arrangement, saying: “These new
arrangements represent a significant step in our efforts
to counter and prevent tax evasion and avoidance.
I commend the Government of Bermuda for its willingness
to implement the high standards of transparency and
exchange of information to which it is committed and
for its continuing leadership in this important global
tax policy area.”
Double Tax Treaties
