Just in time for the G20 economic summit in London, the U.S. Treasury Department has signed a tax information exchange agreement with the government of Gibraltar.
The Mediterranean country has traditionally provided a tax haven to wealthy depositors, but more countries are coming under pressure to relax their banking secrecy laws and share information with other nations’ tax authorities (see More Tax Havens Disclose Secret Information). The topic of offshore tax evasion is among the items on the crowded agenda at the G20 summit.
President Obama’s fiscal year 2010 budget calls for a stronger set of international tax compliance initiatives by the Internal Revenue Service. “The President’s budget makes a commitment to reduce international tax avoidance,” said Treasury Secretary Timothy Geithner (pictured). “I will continue to demand transparency from countries on behalf of American taxpayers.”
The Chief Minister of Gibraltar, Peter Caruana, signed the agreement with Geithner, saying that his country is committed to the Organization for Economic Cooperation and Development standard for tax information sharing. “Properly regulated exchange of information has become increasingly important,” he said. “We look forward to co-operating with the United States under this agreement. As part of the European Union, Gibraltar already complies with EU standards of financial regulation and exchange of information.”
The Tax Information Exchange Agreement with Gibraltar will provide the U.S. with access to information needed to enforce U.S. tax laws, including information related to bank accounts in Gibraltar. The TIEA is the first of its kind for Gibraltar.
The TIEA will permit the U.S. to seek information from Gibraltar and vice versa on all types of taxes in both civil and criminal matters. Only specific tax authorities will be permitted to receive and send information under the agreement. Information exchanged pursuant to the TIEA may be used only for tax purposes, and the tax authorities must safeguard the confidentiality of information exchanged pursuant to the TIEA.
The TIEA will allow the United States to ask for criminal tax information relating to any taxable year and for civil tax information relating to taxable years beginning after 2008 (assuming that the TIEA enters into force this year). Under the agreement, Gibraltar will obtain the same facilities from the U.S. to receive tax information.
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