India inks pact with Bermuda on exchange of tax info

India today entered into an agreement with the Caribbean tax haven Bermuda for exchange of information to check tax evasion and money laundering.

The Tax Information Exchange Agreement (TIEA), as it is known under the parlance of the Organisation for Economic Cooperation and Development (OECD), is the first such pact signed by India with any country.

Under the agreement, signed here by the Prime Minister of Bermuda Ewart Brown and India's Minister of State for Revenue in the Ministry of Finance S S Palanimaickam, both countries can share details on banking, ownership and past information in tax matters.
    
"There is a specific provision for providing banking and ownership information...The agreement also allows exchange of past information in criminal tax matter," an official statement said.
    
It also provides for the two countries to share information relevant to the administration and enforcement of the domestic laws of India and Bermuda.
    
The requesting side has to provide some minimum details about the information requested and any information provided is to be treated as secret and can be disclosed only to relevant tax authorities and oversight bodies.
    
"There is a specific provision that the requested party shall use its information gathering measures to obtain the requested information even though the part may not need such information for its own tax purposes," the statement added.
    
It also provides for disclosure of information to any other person or entity or authority or any other jurisdiction with the written consent of competent authority of the requested party.
    
The two countries had finalised the agreement during a visit by Brown to India in February this year.
    
During that visit, Brown had expressed Bermuda's interest in signing a comprehensive Double Taxation Avoidance Agreement with India.
    
The concept of TIEA was developed by the Paris-based Organisation for Economic Cooperation and Development (OECD) Global Forum Working Group on Effective Exchange of Information for promoting international co-operation in tax matters through exchange of information.
    
It grew out of the work undertaken by the OECD to address harmful tax practices.
    
Jeffrey Owens, head of taxation at OECD had said that TIEA would help India to conform to the OECD standards on sharing tax information.
    
"A tax information exchange agreement will give OECD- mandated exchange to Indian tax authorities and their requests in cases of special inquiries will be better equipped to tackle tax evasion," Owens had said earlier this year.
    
Bermuda is a British overseas territory in the North Atlantic ocean with an population of little less than 70,000. It is one of the world's most famous 'tax havens' or offshore financial centre.