Bermuda And Australia Sign Tax Information Exchange Agreement

By Amanda Banks, Tax-News.com, London

16 November 2005

Bermudian Finance Minister Paula Cox and Australian Treasurer Peter Costello signed a tax information exchange agreement in Washington DC last week.

According to Ms Cox, the agreement marks the first treaty that Bermuda has entered into following a commitment to ban harmful tax practices five years ago.

The Australian authorities have recently escalated their enforcement activities involving offshore transactions, and had been keen to initiate a tax information exchange deal with Bermuda after it became apparent that a significant proportion of funds flowing in and out of the country were being transmitted through Bermuda.

Talks between the two governments commenced in May 2004, with a second round of discussions taking place in August 2005, before the agreement was officially sealed last week.

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 will 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.

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