Wednesday, October 29, 2008

BVI and Australia Governments Sign Tax Information Exchange Agreement

The Premier of the British Virgin Islands (BVI) Hon. Ralph O’Neal and the Australian Assistant Treasurer and Minister for Competition Policy and Consumer Affairs Chris Bowen signed Tax Information Exchange Agreement (TIEA), which provides for full exchange of information on request in both criminal and civil tax matters.

The document is based on the existing legislation in both countries, already providing for mutual legal assistance in criminal matters. Now both governments will share information to eliminate harmful tax practices. The agreement reflects the commitment of the governments of Australia and BVI to implement OECD principles of transparency and effective information exchange, and international standards on anti-money laundering and counter-terrorism financing. The Australian Government has welcomed the BVI admission as a full member to the International Organisation of Securities Commissions, where it joins more than 100 jurisdictions with recognised high standards of regulation and compliance.

According to the TIEA, Australia and the BVI have agreed not to apply prejudicial or restrictive measures based on harmful tax practices to residents or nationals. Australia will not refer to the BVI as a 'tax haven' on the governmental level, and instead it will list the jurisdiction in the Taxation Administration Regulations 1976 as an 'information exchange country'. As a result of the changed status of the BVI, its residents will receive access to reduced withholding tax rates on distribution of certain income they may receive from Australian managed investment trusts.

This is the fourth Tax Information Exchange Agreement for Australia as one of the leading countries implementing international co-operation on tax matters, and the second for the BVI.

Also, Australia and the BVI have signed an agreement for the allocation of taxation rights with respect to certain income of individuals, which will provide benefits to Australian and BVI residents. Both countries also agreed to enter into discussions to develop further co-operation in areas of mutual interest.

Ralph O'Neal in his comments welcomed Australia's recognition of the high regulatory standards set by the BVI, and the continuing engagement of the financial centre in the OECD’s Global Forum on Taxation.

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