UK Chancellor of the Exchequer Gordon Brown will today announce plans for the British Treasury to reach agreements on information sharing with its Overseas Territories in a bid to clamp down on an estimated $1.6 billion tax evasion bill.

And -- according to last month's Budget statement -- the Island could be headed for a clash with the UK Government over the right to privacy of law-abiding businesspeople.

The Budget said it would have no dealings with money-laundering or tax evaders -- and that Government and Britain were in talks over the subject.

But the statement added: "Bermuda is discussing this matter with the United Kingdom since on the one hand, while we do not support the presence in Bermuda of criminal proceeds, or any facility to launder money here, we do respect the privacy of an individual who wishes to conduct legitimate business in our jurisdiction.'' Last night Acting Finance Minister Terry Lister said a full statement would have to wait for the return of Finance Minister Eugene Cox.

But he added: "I have been involved in this -- I know exactly what's going on.

"It's nothing we're surprised about and we know exactly where this thing's going, but the Minister of Finance should be the one to make any announcements or comments.'' According to UK reports, Mr. Brown is determined to stamp out "designer taxation'' where offshore jurisdictions tailor rates to help individual companies avoid UK tax.

And -- as The Royal Gazette reported last year -- Britain's multi-trillion Eurobond market is under threat from an European Union draft directive on cross-border taxation on individuals' savings accounts between member states.

Island faces test of transparency Britain fears that a tax on non-resident investors will drive the business away from London.

The UK has proposed international information exchanges as an alternative to the 20 percent withholding tax proposed by the European Commission.

And the UK's Overseas Territories, like Bermuda and the Caymans, as well as Crown Dependencies like the Channel Islands and Isle of Man, have been accused in the past by EU countries of creating unfair competition through low-tax investment vehicles.

Opposition Legislative Affairs spokesman John Barritt said last night that the only sensible course was "wait and see.'' Mr. Barritt added: "These are the challenges we face as an offshore centre -- naturally we're concerned, but much depends on the position the Government has been taking in talks with the UK Government and whether they have been able to convince Britain that we have in place the required network of a respected financial centre.'' And he added that Bermuda's tax regime applied equally to offshore and onshore firms -- which should help protect the Island.

Mr. Barritt said: "On the issue of exchange of information, we will have to wait to see if what the UK proposes is any different from what we have in place at the moment.'' According to a report in the prestigious Financial Times, the UK Treasury believes it has "considerable leverage''.

And the article added that islands like Bermuda -- which considers itself in the top rank for regulation of the finance sector -- are keen to keep off an international hitlist of dodgy jurisdictions due to be published by the Organisation for Economic Cooperation and Development in June.

The FT article added: "It would not help their case if they were seen to resist an agreement on transparency with the UK.'' Chamber of Commerce International Companies Division chairman David Ezekiel said: "We are talking about what is clearly a low tax regime here, but not one which has `designer taxes.' But he added: "Any increased legislation could always represent a deterrent.

"I don't want to minimise the fact there might be an impact but, at the end of the day, we have a well-regarded domicile and if anyone is positioned to meet the sort of standards and tests they might impose, Bermuda is.'' Mr. Ezekiel said he doubted any reputable offshore jurisdiction would hand over lists of clients for no good reason.

He added: "I think what any responsible domicile will do is impose on local service providers, like law firms and accountants, to install a set of standards so they can maintain the privacy of their client base and accept the responsibility for ensuring that client base is not there for tax evasion purposes or investing in Bermuda ill-gotten gains.''