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Bank Secrecy and Information Exchange in Tax Havens
By admin | February 20, 2009
We are all looking for an elusive thing called banking and financial privacy. Offshore banks certainly offer a much greater degree of privacy than their onshore counterparts, but it’s often hard to keep up to date on developments. With this in mind, the following information from Isla Offshore covers a number of popular offshore banking jurisdictions, and reflects the current status of their policies and mechanisms as towards sharing confidential financial information with governments.
The terms used below mean:
Tax treaties – existence of TIEA/DTC tax providing for exchange of information.
Other regulations – domestic law and other regulations allowing for exchange of information with other countries.
Bank information – access to bank information, bank secrecy towards tax authorities.
Competent Authority - means the local financial regulatory body. I think this information (whether competent authority has direct access to banking records) is particularly useful and informative, for reasons that should be obvious. It really says everything about the jurisdiction’s attitude to privacy: whether bureaucrats are allowed direct access to bank account information.
Ownership – access to ownership identity and accounting information.
ANGUILLA
- Tax treaties: none reported.
- Other regulations: EU Savings Tax Agreements.
- Bank information: only in criminal tax matters subject to MLAT with USA. Competent authority has direct access to bank information.
- Ownership: no access in civil tax matters, except for the purposes of EU Savings Tax Agreements. In criminal tax matters only in other cases. Bearer shares may be issued, but Anguilla is planning to adopt legislation requiring the immobilization of bearer shares.
BAHAMAS
- Tax treaties: TIEA with USA.
- Other regulations: none reported
- Bank information: in all tax matters. Competent authority has direct access to bank information.
- Ownership: in all tax matters under the TIEA.
BELIZE
- Tax treaties: DTC with Austria, Switzerland (limited exchange), UK, CARICOM (Antigua and Barbuda, Barbados, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago).
- Other regulations: anti-money laundering law, allowing for exchange of information in criminal tax matters with all countries, if it is considered to be a criminal offence in requesting country.
- Bank information: in criminal tax matters only. Competent authority has NO direct access to bank information. Court order is required.
- Ownership: in all tax matters (except for the bank information, which is restricted to criminal tax matters only). Court order is required. Bearer shares issued by IBC incorporated after 2000 must be immobilized.
BVI
- Tax treaties: DTC with Switzerland (limited exchange), UK (signed, not in force). TIEA signed, not in force with UK, USA. MLAT with USA.
- Other regulations: EU Savings Tax Agreements; Mutual Legal Assistance (Tax Matters) Act 2003.
- Bank information: in all tax matters. Competent authority has direct access to bank information.
- Ownership: in all tax matters under the TIEA. Bearer shares must be held by an approved/authorized custodian (Bearer shares held by companies incorporated prior to 1 January 2005 must be immobilized by 2010).
CAYMAN ISLANDS
- Tax treaties: TIEA with USA.
- Other regulations: EU Savings Tax Agreements.
- Bank information: in all tax matters. Competent authority has direct access to bank information.
- Ownership: in all tax matters under the TIEA. Bearer shares must be immobilized.
CYPRUS
- Tax treaties: DTC in force with 45 countries.
- Other regulations: European Convention (39 countries) on Mutual Assistance in Criminal Matters, including fiscal protocol; Cyprus also exchanges information with EU members basing on EU exchange mechanisms.
- Bank information: Cyprus exchanges information with other EU Member States under EU Savings Tax Directive. Otherwise a domestic tax interest is required to obtain access to bank information. This policy is currently under review. Competent authority has NO direct access to bank information. Court order is required.
- Ownership: in all tax matters (except for the bank information). Court order is required. Bearer shares may not be issued.
DOMINICA
- Tax treaties: DTC with Switzerland, CARICOM (Antigua and Barbuda, Barbados, Belize, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago). TIEA with USA.
- Other regulations: none reported.
- Bank information: access to information is through Financial Intelligence Unit.
- Ownership: in all tax matters subject to DTC or TIEA. Bearer shares must be held by an approved custodian.
GIBRALTAR
- Tax treaties: none.
- Other regulations: EU Mutual Assistance Instruments and applicable domestic law. Internal policy of the Government allows information exchange in criminal tax matters using the Evidence Act with letters of request with effect from 13 March 2008.
- Bank information: Gibraltar has no powers to obtain information from banks and financial institutions, except for the purposes under the EU Savings Directive.
- Ownership: no, except for the purposes of EU Savings Tax Agreements. Bearer shares may not be issued.
GUERNSEY
- Tax treaties: DTC with Jersey, UK. DTC signed, not in force with Denmark, Finland, Norway. TIEA with USA. TIEA signed, not in force with Netherlands, Sweden, UK.
- Other regulations: EU Savings Tax Agreements; Fraud Investigation Law Allows for assistance including exchange of information in cases of serious or complex fraud including tax fraud (with all countries); Mutual Legal Assistance Law Allows for assistance including exchange of information in criminal tax matters which do not involve serious or complex fraud or money laundering with all countries; Anti-Money Laundering Law: all crimes money laundering legislation which allows Guernsey’s authorities to assist overseas authorities investigating criminal conduct or the whereabouts of proceeds of such conduct including tax fraud (with all countries).
- Bank information: in all tax matters with USA; In criminal tax matters only with all other countries. Competent authority has direct access to bank information in connection with TIEA.
- Ownership: in all tax matters. Bearer shares may not be issued.
HONG KONG
- Tax treaties: DTC with Belgium, China, Thailand. DTC signed, not in force with Luxembourg, Vietnam.
- Other regulations: none reported.
- Bank information: in all tax matters but only if domestic tax interest presents. Competent authority has direct access to bank information.
- Ownership: in all tax matters. Share warrants may be issued to bearer, but Hong Kong is now rewriting its company law to consider whether the issue of share warrants to bearer should still be permitted.
ISLE OF MAN
- Tax treaties: DTC with Denmark, Finland, Greenland, Iceland (signed, not in force), Ireland, UK. TIEA with Faroe Islands, Denmark, Finland, Greenland, Ireland, Netherlands, Norway.
TIEA signed, not in force with Iceland, Sweden, UK. - Other regulations: EU Savings Tax Agreements; Anti-Money Laundering Law allows information to be disclosed for the purposes of the prevention or detection of crime including tax crimes or for the purposes of criminal proceedings in another country (with all countries); Criminal Justice Acts allow the Attorney General to obtain and provide information relating to a suspected offence involving serious or complex fraud, criminal proceedings that have been instituted or a criminal investigation that is being carried on in another country (with all countries). Where a request for information relates to a tax offence in respect of which proceedings have not yet been instituted, there is a requirement that the request must be from a member of the Commonwealth or is made pursuant to a treaty to which the United Kingdom is a party and which extends to the Island; if these conditions are not complied with then there is a dual criminality requirement; Evidence (Proceedings in Other Jurisdictions) Act gives effect to the Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters.
- Bank information: in all tax matters in case of DTC or TIEA present. In criminal tax matters only with all other countries. Competent authority has direct access to bank information in connection with TIEA or a new DTC.
- Ownership: in all tax matters under the TIEA or a new DTC. In criminal tax matters only in the other cases. Bearer shares may not be issued.
JERSEY
- Tax treaties: DTC with Guernsey, UK. DTC signed, not in force with Finland, Iceland, Norway. TIEA with Netherlands. TIEA signed, not in force with Germany, Iceland, Sweden.
- Other regulations: EU Savings Tax Agreements; Fraud Investigation Law allows for assistance including exchange of information in cases of serious or complex fraud including tax fraud (with all countries); Mutual Legal Assistance Law allows for assistance including exchange of information in criminal matters, including tax matters (with all countries); Anti-Money Laundering allows for international co-operation with respect to money laundering which includes the laundering of the proceeds of tax crimes (with all countries); Criminal Justice (International Cooperation) Law allows Jersey to cooperate with other countries in criminal investigations and proceedings and for related purposes; Evidence (Proceedings in Other Jurisdictions) gives effect to the Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters.
- Bank information: in all tax matters in case of TIEA present. In criminal tax matters only with all other countries. Competent authority has direct access to bank information in connection with TIEA.
- Ownership: in all tax matters under the TIEA. In criminal tax matters only in the other cases. Bearer shares may not be issued.
LIECHTENSTEIN
- Tax treaties: TIEA signed, not in force with USA.
- Other regulations: EU Savings Tax Agreements.
- Bank information: in criminal tax matters. Competent authority has NO direct access to bank information. Court order is required.
- Ownership: in criminal taxes only with respect to the MLAT with the United States and interest income paid to individuals resident in EU Member States. Bearer shares may be issued.
PANAMA
- Tax treaties: none.
- Other regulations: MLAT with USA but tax matters are excluded unless they relate to drug trafficking.
- Bank information: in criminal tax matters related to drug trafficking only.
- Ownership: in criminal tax matters related to drug trafficking only. Bearer shares may be issued.
SEYCHELLES
- Tax treaties: DTC with Botswana, China, Cyprus, Indonesia, Malaysia, Mauritius, Oman, South Africa, Thailand, UAE. DTC signed, not in force with Barbados, Belgium, Vietnam, Zimbabwe.
- Other regulations: Mutual Legal Assistance Law allows for exchange of information in criminal matters, which includes criminal matters relating to revenue (including taxation, customs duties or trade tax). The Act implements the Commonwealth scheme relating to mutual assistance in criminal matters within the Commonwealth and to other countries, where there is a bilateral mutual assistance treaty or to give effect to another treaty or as specified by regulation; Anti-Money Laundering Law that will continue the all crimes provisions of existing legislation is under preparation. Predicate offences will include offences under tax laws, which will be open to exchange of information under the Mutual Legal Assistance Law.
- Bank information: in all tax matters. Competent authority has direct access to bank information.
- Ownership: in all tax matters. Bearer shares may be issued.
ST. VINCENT AND THE GRENADINES
- Tax treaties: DTC with CARICOM (Antigua and Barbuda, Barbados, Belize, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago), Switzerland.
- Other regulations: Mutual Legal Assistance Law allows for assistance to be given to the Commonwealth countries in criminal matters in relation to serious or indictable offences, including tax offences. There is also provision for cooperation with non-Commonwealth countries but this is subject to amendments to the regulations.
- Bank information: in criminal tax matters, but dual criminality applies. Criminal conduct is drug trafficking or a relevant offence under the anti-money laundering legislation (crime money proceeds). Information gathering powers adopted to implement the CARICOM tax treaty do not extend to information in the offshore sector. Access to information is through Financial Intelligence Unit.
- Ownership: in criminal tax matters only. Bearer shares must be held by an approved custodian.
Further information may be found in the Practical Offshore Banking Guide 2009 available from Q Wealth Report. If you are interested in a personal meeting with Peter Macfarlane, it’s not too late to book for the Meet the Men Who Made Their Clients Millions conference in Ireland next month.
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February 26th, 2009 at 12:12 am
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