The G20 meeting in Washington last week sought to come up with global solutions to the current financial crisis. A big part of this is determining how governments will pay for their remedies. You can expect the pressures on low tax jurisdictions to increase rapidly.
The Washington Summit communique also urged that “tax authorities, drawing upon the work of relevant bodies such as the Organization for Economic Cooperation and Development (OECD), should continue efforts to promote tax information exchange. Lack of transparency and a failure to exchange tax information should be vigorously addressed.”
The process of increasing tax transparency is however already well advanced, with a spate of recent Tax Information Exchange Agreement (TIEA) signings, against the backdrop of a threatened OECD blacklist second coming. The OECD declared itself satisfied with progress following a recent week that saw the signing of 16 new bilateral TIEAs:
“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.
There have been 44 TIEA 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.
We tend not to have much visibility into these agreements - either which ones are under negotiation or their content. It’s clear that this must be a priority for Bermuda, and one that will require skill and careful consultation with our international business customers.