OECD Promotes Multilateral TIEAs

by Ulrika Lomas, Tax-News.com, Brussels

31 March 2010

The Organisation for Economic Co-operation and Development (OECD) has developed a new approach to negotiating tax information exchange agreements (TIEAs) involving multilateral negotiations, in order to assist developing countries with resource constraints.

Small jurisdictions often lack the resources needed to conclude large numbers of tax information exchange agreements quickly. Even larger jurisdictions may be unable to devote the resources necessary to negotiate TIEAs with small and geographically distant partners.

Modelled on a similar approach developed by the Nordic economies, the method uses a single negotiating team representing the interests of the OECD member countries to reach agreement on the terms of a TIEA with a non-OECD jurisdiction or group of jurisdictions. Once agreed, each of the OECD member countries signs a separate bilateral agreement with the non-OECD jurisdiction.

Many non-OECD jurisdictions expressed interest in the initiative and it was launched in 2009 with the creation of three pilot projects:

• The Southern Caribbean Project, coordinated by the Netherlands; participating member countries include Australia, Belgium, Denmark, Faroe Islands, Finland, Greece, Greenland, Iceland, Ireland, Norway, Slovakia, Sweden, United Kingdom for TIEAs with partner jurisdictions including Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines;
• The Northern Caribbean Project, coordinated by the United Kingdom; participating member countries include Australia (for Montserrat only), Denmark, Faroe Islands, Finland, Greenland, Greece, Iceland, the Netherlands, Norway, Slovakia for TIEAs with partner jurisdictions including Anguilla, Montserrat, Turks and Caicos Islands; and
• The Pacific Project, coordinated by the OECD Secretariat; participating member countries include Denmark, Faroe Islands, Finland, Greenland Greece, Iceland, Italy, Ireland, Korea Japan, Mexico the Netherlands, Norway, Slovakia, Sweden for TIEAs with partner jurisdictions including Cook Islands, Marshall Islands, Nauru, Samoa, Vanuatu.

More than 100 TIEAs have been or will shortly be signed as a result of the initiative. A number of the participating non-OECD jurisdictions, e.g. Anguilla, Samoa, St. Kitts and Nevis, St. Vincent and the Grenadines and the Turks and Caicos Islands have now moved into the “substantially implemented” category in the Progress Report first published in April 2009.

Others have initialled or reached agreement on the text of at least twelve TIEAs and will move into this category as soon as the agreements they have concluded are signed. These include:

• Cook Islands
• Dominica
• Grenada
• Marshall Islands
• St Lucia
• Vanuatu

Given the number of agreements that have been negotiated and the time it takes to complete the legal formalities needed to sign them there may be delays of 3 - 4 months between the time an agreement is reached on the text of a TIEA, and its signature.

As a result of the success of the pilot projects the multilateral negotiations initiative has been extended to three other jurisdictions: Belize, Costa Rica and Liberia.

Belize has reached agreement on the text of TIEAs with at least 12 OECD countries. The negotiations with Liberia have only just commenced but are expected to proceed quickly. Negotiations with Costa Rica will commence shortly. These negotiations are being coordinated by the OECD Secretariat.

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