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Multilateral TIEAs for Offshore Centres

20 May, 2009

The HMRC has applied for an order that will legally compel all 500 banks with a presence in the UK to hand over details of customers with offshore accounts.

It is expected that offshore centres wanting their names removed from the OECD grey and black lists, will be willing to sign a large number of TIEAs. A mechanism for concluding multi-lateral agreements has been set up by the OECD and many countries are agreeing that this is the way forward.

Offshore financial centers are requesting tax agreements as the model for achieving greater tax co-operation and transparency across borders.

A bilateral agreement is currently the most common TIEA (2 parties negotiating the terms of agreement); however the Isle of Man and Jersey agree that multilateral agreements are the way forward.

The assessor of income tax on the Isle of Man, Mr. Malcolm Couch, has said that bilateral agreements don't always suit the tax policy of the negotiating countries. He feels that countries with smaller administrations find the commitment complicated. Couch is quoted as saying, ‘That's why the OECD is considering a multilateral approach…it's to build the capacity. Multilateral TIEAs has to be a model of the future”. Couch also said that part of the appeal of multilateral TIEAs would be that agreements are signed quicker, with the OECD playing an important role. The multilateral, consensual approach would therefore speed things up.

The chief executive of Jersey Finance Mr. Geoff Cook, was quoted as saying; “The challenge for OECD is that people do press forward with the agreements. There will be a drive now following the G20 to get on board with non OECD G20 countries and EU countries”.

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