Bermuda Signs Tax Info Exchange Agreement With Japan

by Amanda Banks, Tax-News.com, London

04 February 2010

Bermuda’s Minister of Finance, Paula Cox has announced the signing of a bilateral agreement with Japan for the full exchange of information in criminal and civil tax matters, under an Organization for Economic Cooperation and Development (OECD) model Tax Information Exchange Agreement (TIEA) on February 1, and further announced that a text has been agreed on a another agreement with South Korea.

The signing of the agreement with Japan took place at a ceremony at the Japanese Embassy in London on February 1. Amongst those benefits accrued for Bermuda within the TIEA is a clause for Prohibition of Prejudicial or Restrictive Measures and a mini Double Taxation Agreement that will provide benefits for students and pensioners.

Cox noted that the signing of the agreement would further enhance Bermuda's position as a territory that draws in considerable international business: "Already approximately 20-25% of Japanese Property Cat business is placed in Bermuda, as well as 5% of Property Pro-Rata business," she explained. "With over 100 companies in Bermuda with Japanese interests, we see this agreement as enhancing opportunities for further foreign direct investment between our two countries and a great step forward in cementing the relationship between Bermuda and Japan. Moreover, this TIEA marks Bermuda's nineteenth signed tax information exchange agreement, further demonstrating that Bermuda is far from complacent about our elevated position on the OECD white list and that we are resolved, as always, to implement the internationally agreed tax standard."

David Ezekiel, Chairman of the Association of Bermuda International Companies, added: "The signing of this TIEA with Japan after months of work and negotiation, coming on the heels of Bermuda being selected to host the 2011 OECD Global Forum, is another major step forward for Bermuda. Japan has a major involvement in the Bermuda market by way of ownership in the International Business sector and in trading with Bermuda-based companies. The treaty contains many useful benefits not only for the business sector but for individuals, including students who might be traveling to Japan for studies."

Bradley Kading, President and Executive Director of the Association of Bermuda Insurers and Reinsurers, echoed Ezekiel's sentiments: "This TIEA is particularly noteworthy as Japan is the world's second largest economy and Japanese insurers have been active participants in the Bermuda market for years. Japan has a natural interest in the hurricane and earthquake reinsurance provided by many Bermuda companies."

Bermuda now has TIEAs with the following members of the G7: Japan, France, Germany, the UK and the US. In addition, Bermuda has TIEAs with Australia, Ireland, New Zealand, the Netherlands, the Nordic Group (including Denmark, Finland, Iceland, Norway and Sweden and their associated territories the Faroe Islands and Greenland), Netherlands Antilles and Aruba, and Mexico.

According to the Bermudian government, the TIEA and Protocol with Japan includes all standard means to ensure due process is followed in tax information requests to Bermuda. These include provisions to protect the confidentiality of information provided, as well as adhering to public policy, provisions related to protecting legal privilege, and anti-fishing provisions to ensure that requests for information from Japan are relevant to ongoing tax investigations being conducted by Japanese authorities.

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