Offshore Centres Sign 16 Bilateral Pacts

by Ulrika Lomas, Tax-News.com, Brussels

03 November 2008

Some 16 new bilateral agreements on exchange of information for tax purposes were signed in the past week between OECD member countries and three offshore financial centres, as the countries stung by the recent banking crisis commence a fresh drive towards "transparency" in global financial regulation and taxation.

During the week in question, the British Virgin Islands signed bilateral tax information exchange agreements (TIEAs) with Australia and the United Kingdom. Meanwhile, Guernsey and Jersey each signed bilateral TIEAs with the Nordic economies- Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden.

These new agreements bring to 44 the number of arrangements put in place since 2000 when the OECD began its first offshore crackdown. The Isle of Man is leading, with 11 such pacts; Jersey has signed 10, Guernsey nine, the Netherlands Antilles four and the British Virgin Islands three. Bermuda, also has three of these agreements, having signed its first bilateral pact with the United States in 1986.

In signing the agreements, these offshore centres may well have succeeded in ensuring that they do not get included on any new 'blacklist', which is likely to be published some time in 2009.

"The latest agreements represent a significant extension of information exchange networks in place in these jurisdictions, showing their commitment to implementing OECD’s standards of transparency and exchange of information in tax matters," the organisation noted.

As the OECD observed in its announcement, the global financial crisis and recent tax evasion scandals have strengthened governments’ determination to fight tax evasion and bring increased transparency to cross-border transactions.

“At a time when governments are seeking to forge a more stable world financial system, these are issues that need to be addressed with urgency,” said OECD Secretary-General Angel Gurría said.

The OECD also revealed that progress towards increased openness is being made in other financial centres. Cyprus and Malta have removed the last impediments to full exchange of information; Belgium has negotiated its first tax treaty with full exchange of information; Bahrain and the United Arab Emirates are implementing the OECD standards; and the government of Hong Kong (China) recently launched a review of its policy on exchange of information.

“The political climate is changing, and financial centres that do not respect the OECD standards will not be allowed to gain a competitive advantage,” Gurría added.

“Every new bilateral agreement demonstrates that we can make progress internationally. It is in the interest of all financial centres to have adequate measures in favour of full transparency as quickly as possible," he argued.

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