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Bermuda
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.
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 exchanged
letters setting up an arrangement for the exchange
of tax information, which follwed three 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.”
In
2009, Bermuda
signed 8 new tax information exchange agreements,
with 7 Nordic economies – Denmark, Sweden, Finland,
Greenland, Iceland, Norway and the Faroe Islands and
with New Zealand, bringing the number of agreements
it holds to eleven. It had previously signed agreements
with Australia, the United Kingdom and the United
States.
Bermuda
was one of the first jurisdictions to commit to the
international standards of transparency and exchange
of information in May 2000, and one of 11 jurisdictions
that contributed to the development of the Model Agreement
on Exchange of Information in Tax Matters in 2002,
on which the bilateral agreements with the Nordic
economies are based. Since then it has been working
to develop its network of exchange of information
agreements.
The
latest agreements mark a further acceleration in international
efforts to implement the standards developed by the
OECD’s Global Forum on Transparency and Exchange
of Information, which brings together both OECD and
non-OECD economies to review issues relating to the
implementation of international standards in these
areas. Over the last few weeks, a number of economies
- including in Asia, Europe and Latin America, as
well as the Caribbean - have announced plans to remove
impediments to the exchange of bank information for
tax purposes and to implement the international standards
within specific time frames.
Commenting
on the recent signings, Jeffrey Owens, Director of
the OECD’s Centre for Tax Policy and Administration,
said: “ Bermuda is an important financial centre
that played a constructive role in developing the
standards now endorsed by all major financial centres.
I am very pleased that it has taken another significant
step in implementing the standards. I know that it
is determined to implement the standards fully and
that other agreements will follow shortly.”
In
April, 2009, Paula
Cox released a statement regarding Bermuda’s
placement on the OECD’s list of uncooperative
territories. The OECD’s list features Bermuda
in the second tier of compliant territories who have
not substantially implemented the OECD standard.
In
a statement after the OECD’s announcement, Paula
Cox described the OECD's latest list as a ‘progress
report’ announcing that Bermuda would be in
the top tier of ‘fully compliant’ countries
by the end of 2009.
“A
TIEA with Germany is planned for the near future,
bringing Bermuda's total to 12 in fairly short order.
At least two more TIEAs are expected to be signed
by the end of this year or early next year,”
reassured Cox.
"Based
on our understanding that the OECD standard was very
recently set at 12 treaties, Bermuda will have met
the standard before the close of 2009 and most probably
ahead of the next G20 Summit Meeting which is scheduled
for later in the year,” Cox concluded.
It
was also announced in April that Bermuda had signed
a TIEA with New Zealand.
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