Tax International Exchange Agreement.
Tax International Exchange Agreement
What is Tax International Exchange Agreement? In recent years there has been an actively increasing international cooperation in tax information exchange. In this regard, an acute problem has risen to develop effective mechanisms for the exchange of information on tax matters at the international level. Most dynamic work in this direction has been done by the Organisation for Economic Cooperation and Development (OECD).
Tax Information Exchange Agreements (TIEAs) are bilateral agreements under which territories agree to co-operate in tax matters through exchange of information. The agreement was developed by the OECD Global Forum Working Group on Effective Exchange of Information (“the Working Group”). Countries that sign TIEA share information on tax laws and other data that is relevant to taxation, in order to detect deviations from taxation in the commission of international trade and other international business transactions.
Jurisdictions that do not support the mechanisms for the exchange of tax information, which is not consistent with the international standards of tax transparency, included in the “black list” of the OECD. If the jurisdiction has information exchange mechanisms, but they are insufficient, it is placed in the “grey list”.
Jurisdictions that are fully standards-compliant to “tax transparency” requirements fall into “white list”. In order to get into the “white list”, a country must enclose with the OECD jurisdiction at least 12 “agreements of relevant international standards of tax transparency.”
In accordance with the TIEA, the following information shall be disclosed: Any information stored in banks or other financial institutions, at par, agent, fiduciary or trustee. Information about owners of companies, partnerships, trusts, foundations and other persons, including information on all actors in the chain of ownership, and in respect of trusts/funds – about the founders, trustee/fund managers and beneficiaries.
The exception is information on public companies and collective investment instruments if they are getting connected with the “disproportionate difficulties.”
According to TIEA information is not provided automatically. Each TIEA has a number of guidelines and criteria to be followed by the jurisdiction representing a request for information. Therefore it is important to get acquainted with the conditions of TIEAs, especially those concerning the conditions which must be met before the help can be provided.