UK-Isle of Man tax agreement may be sign of things to come for Bermuda
The UK has signed an enhanced tax information exchange agreement with the Isle of Man that allows for some information to be exchanged automatically.
If Britain pursues similar arrangements with its other territories to clamp down on tax evasion, then something similar may be coming to Bermuda soon.
The UKs Exchequer Secretary to the Treasury, David Gauke, has stated that Britain has also had talks with Jersey and Guernsey on enhanced tax information exchange and hopes to make similar agreements with other jurisdictions.
The Isle of Man agreement will provide the Her Majestys Revenue and Customs (HMRC) with a range of additional information about potentially taxable income in Manx bank accounts, the UK Treasury said in a statement.
Under the enhanced information exchange agreement, the UK and Isle of Man will automatically exchange a wide range of information on tax residents, on a reciprocal basis, the statement added.
This is part of a package of measures being developed by the UK and the Isle of Man as part of a shared commitment to combat tax evasion.
Last week, this newspaper referred to an article in the International Tax Review that suggested the UK was intending to impose Fatca-style regulations on its Overseas Territories and Crown Dependencies.
The US Foreign Account Tax Compliance Act (Fatca), which will come into force in the middle of next year, requires foreign banks to report American account holders details to the US Inland Revenue Service. A 30 percent withholding tax on all transactions done with the US will be imposed on those institutions that do not comply.
In response to our questions, the Ministry of Finance said it was aware of the subject and had proactively taken appropriate action, but declined to give further details.
Asked on Friday for comment on whether something similar to the Isle of Man agreement was likely, the Ministry reiterated its previous response and added: An important factor to note is that Bermuda basically led the way with TIEAs [tax information exchange agreements], and our agreements encompass an adequate and robust mechanism for the exchange of information between jurisdictions.
So as not to compromise action underway, no additional comment can be made at this time.
Mr Gauke at the UK Treasury said the Isle of Man agreement would significantly boost the UKs ability to tackle cross-border tax evasion.
Automatic information exchange is an important tool in boosting HMRCs ability to clamp down on those who seek to hide their money overseas, Mr Gauke added.
Our ground-breaking agreement with the US sets a new standard in international tax transparency and todays agreement between the UK and Isle of Man to move to much greater levels of automatic exchange is the next step in this process.
For years people said this couldnt be done, so I welcome the progress we have made so far with the Isle of Man. We are looking to reach similar agreements with other jurisdictions and are in discussions with Jersey and Guernsey about enhanced information exchange as part of our common commitment to combat tax evasion.
The UK Treasury says the agreement will follow, as closely as practicable, the UK-US Agreement to Improve International Tax Compliance and to Implement Fatca, in order to minimise burdens on financial institutions.
The UK-US agreement, signed in September this year, establishes a reciprocal approach to Fatca implementation, so while the UK Government collects information for the US tax authorities, the US is required to do the same thing for the UK.
Details of the necessary operational and implementation requirements are still being discussed and will be announced in due course.
HMRC is developing a new centre of excellence to clamp down on offshore tax dodging. The department is also working on a comprehensive strategy for tackling offshore evasion to be published in the spring of next year.
Paget roadworks delayed until Wednesday
Restaurant plans for Shelly Bay approved
‘Uncertain’ climate for hurricane season
Delays warned over passport printing switch
Best feet forward for Relay for Life
Man pleads guilty to smashing car
Bascome to continue family tradition
God has transformed my mind and my thinking
Crash victims get treatment
Take Our Poll