TIEA requests under the International Cooperation (Tax Information Exchange Agreements) Act 2005
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Jeremy’s practice focuses on corporate finance, mergers and acquisitions, corporate reorganisations and restructurings, banking and international real estate finance, structured finance, as well as regulatory and legislative compliance.
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The Ministry of Finance v E,F,H &O [2014] SC (Bda) Civ 43 (30 May 2014)
The Ministry of Finance v O [2014] SC (Bda) 60 Civ (17 July 2014)
These two cases related to a request for exchange of information under the International Cooperation (Tax Information Exchange Agreements) Act 2005 (the “Act”). Bermuda has entered into over 30 Tax Information Exchange Agreements (“TIEAs”) in recent times. With the increase in TIEAs has come an increase in requests from foreign governments. Consistent with the increase in such requests, the Bermuda courts have started to see a wave of judicial review challenges seeking to challenge the legality of TIEA requests under the Act.
In these particular cases, not only was such judicial review challenge rejected, but it was held that the TIEA requests had to be complied with even if they required the preparation of new documentation, not merely the production of pre-existing documents, setting out the information required. The second case went on to confirm that the costs of compliance with the production orders made under TIEAs should be borne by the entity tasked with the provision of such information.
The Bermuda case law is of interest internationally, as other offshore financial centres have started to experience similar waves of litigation designed to challenge and test the strengths of TIEAs and TIEA-related legislation (both Jersey and the Cayman Islands have witnessed cases in this area). In the long-term, it is uncertain how much more TIEA-related litigation we will see. With the Bermuda government’s decision to implement FATCA Model 2 Intergovernmental Agreements with the USA and the UK, and Bermuda’s request to the UK government that the Multilateral Convention on Mutual Administrative Assistance in Tax Matters be extended to Bermuda (further to OECD, EU, G5, G8, and G20 initiatives to move to an international standard of automatic disclosure of tax information), TIEAs and TIEA-related complaints might soon become redundant. In the new world order of automatic disclosure of tax information, there might simply be no TIEA requests left to challenge. Whether or not there are any ‘non-cooperative’ jurisdictions left for the OECD to highlight, however, will depend on whether or not inter-governmental promises of automatic disclosure are actually kept.