Bermuda, Indonesia Conclude TIEA Talks

by Amanda Banks, Tax-News.com, London

28 June 2010

Bermuda and Indonesia have concluded negotiations towards a Tax Information Exchange Agreement (TIEA), the text of which incorporates the Organization for Economic Cooperation and Development (OECD) standard on transparency and tax information exchange in civil and criminal tax matters.

The TIEA is expected to be signed later this year after both countries’ internal approval processes have been completed.

Negotiations took place at the Ministry of Finance, in Hamilton, in the week of June 7, at which time discussions on a number of issues of common interest also took place.

Welcoming the agreement, Bermuda’s Minister for Finance, Paula Cox, said: “I am delighted today for Bermuda to [initial] this agreement with the Republic of Indonesia. Indonesia has the remarkable distinction of having outperformed its regional neighbours and joined China and India as the only G20 members posting growth during the recent financial crisis. Together, Bermuda looks to the Republic of Indonesia as a key strategic relationship we are keen to foster.”

“Indeed, as the negotiations for this TIEA were held in person in Bermuda, a valuable opportunity was provided for the Indonesian Ministry of Finance to get a more rich and fulsome view of Bermuda, our strong regulatory regime, and our success as a well-established and well-regarded financial centre.”

“Currently, there are 62 entities in Bermuda with an Indonesian interest, and we expect this number to grow exponentially as our economic and political ties with Indonesia are strengthened and deepened. This agreement is a significant step forward both in enhancing business ties and investment opportunities between Bermuda and Indonesia but it will also facilitate Bermuda expanding our offerings in the realm of Islamic structured finance, including both conventional and Shari’iah investment funds. It is likely that the global market for Islamic insurance, or Takaful, will continue to grow, opening exciting possibilities for Bermuda reinsurers.”

Bermuda currently has 21 signed agreements with provisions for the exchange of information for tax purposes. Bermuda has signed TIEAs with the United States, Australia, the United Kingdom, New Zealand, the Nordic countries (Sweden, Norway, Finland, Denmark, Iceland, Greenland, the Faroe Islands), the Netherlands, Germany, Ireland, the Netherlands Antilles, France, Mexico, Aruba, Japan, and Portugal. Further, Bermuda has a double taxation agreement with Bahrain.

Bermuda’s proposed TIEA with the Republic of Indonesia includes all standard means to ensure due process is followed in tax information requests to Bermuda, including, for example, provisions to protect the confidentiality of information provided and provisions related to protecting legal privilege. The agreement also ensures that requests for information from Indonesia are relevant to tax investigations being conducted by Indonesian authorities.

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