International Law

TAX INFORMATION EXCHANGE AGREEMENTS

By Karel.Frielink

Tax Information Exchange Agreements (TIEA) and the Netherlands Antilles

In today?s world the ?exchange of information? is considered an important topic worldwide, appearing in many different areas, in local and international political discussions, international agreements including the process of implementation of these agreements, and in amendments of local laws and existing treaties. (Mainly as a follow-up to the recommendations and designated directions of the OECD).

Against this backdrop, in 2000, the TIEA (Tax Information Exchange Agreement) was developed by the OECD Global Forum Working Group on the effective exchange of information to promote international co-operation on tax matters through exchange of information. The principles of transparency and effective information exchange for tax purposes are primarily reflected in the 2002 OECD?s Model Agreement on the Exchange of Information on Tax Matters (the OECD Model TIEA) and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and Capital (?the OECD Model Tax Convention?) and its commentary, as updated in 2004 (and approved by the OECD Council on 15 July 2005).

Why are TIEAs so important? In order to ensure the implementation and execution of individual countries? tax laws, jurisdictions are entering into agreements (TIEAs) on the exchange of information for tax purposes. Without such TIEAs in place, it is often formally impossible for tax authorities to exchange or request information for tax purposes from other jurisdictions, without violating the formal obligation of secrecy of such jurisdictions. A TIEA consists of agreements made between two jurisdictions, and creates for both ?treaty parties? rights and obligations which must be, embraced, implemented, obeyed, and respected. In general, experience with regard to the implementation and the practical outcome of the rights and obligations, as agreed in a TIEA, depends completely on the cooperation, professionalism and integrity of the parties to the treaty.

 The Netherlands Antilles and TIEA?s

The first TIEA which was established and signed between the Netherlands Antilles and the United States of America on April 17, 2002, entered into force on March 22, 2007. The negotiation and signing of TIEA?s between the Netherlands Antilles and their treaty partners is a first step towards future agreements for the avoidance of double taxation. TIEA?s and double taxation agreements (the latter for the prevention of double taxation on income earned), are essential for creating an open and competitive economy. In general, the Netherlands Antilles strives to eliminate trade barriers and embraces entry into world markets.

The establishment of TIEA?s is one of the measures taken by the Netherlands Antilles towards its ambitions and goals of achieving a first class ranking in the international financial services center. The Kingdom of the Netherlands is involved in ongoing negotiations on behalf of the Netherlands Antilles with 20 countries, thus far, to conclude and ratify TIEA agreements. As of today the Netherlands Antilles has four TIEA agreements in place and is in the process of concluding TIEAs with  a further 16 jurisdictions. These agreements are already signed and are expected to enter in force within a reasonable period of time.

This has been instrumental in the Netherlands Antilles being removed from the list of ‘uncooperative tax havens’, the so called black list of the OECD. The Netherlands Antilles is therefore considered to have committed to the internationally agreed tax standard.

Needless to say the Netherlands Antilles has had an arrangement in place with the Netherlands and Aruba since 1964, covering both the exchange of information as well as the avoidance of double taxation.

Anne Marije Veenland

Tax Adviser – Spigthoff Curacao

(6 July 2010)

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Full post as published by Karel's Legal Blog on July 06, 2010 (boomark / email).