TIEA agreement was signed between India and Isle of Man | What is a Tax Information Exchange Agreement?

India and Isle of Man recently signed a Tax Information Exchange Agreement (TIEA) on 4th February, 2011 in London. The agreement has been signed by Shri Nalin Surie, High Commissioner of India to the United Kingdom from Indian side and Hon. Anne Craine, MHK, Minister of the Treasury from Isle of Man side. This is the second TIEA being signed by India. First TIEA was signed with Bermuda in Delhi on 7th October, 2010.

Important features of the agreement with Isle of Man are:

1. It is based on international standard of transparency and exchange of information.
2. Information must be foreseeably relevant to the administration and enforcement of the domestic laws of the Contracting Parties concerning taxes covered by the agreement.
3. The requesting State has to provide some minimum details about the information requested in order to justify the foreseeably relevance criteria.
4. Information is to be treated as secret and can be disclosed to only specified person or authorities, which are tax authorities or the authorities concerned with the determination of tax appeal.
5. It also provides for disclosure of information to any other person or entity or authority or any other jurisdiction with the written consent of the competent authority of the requested Party.
6. There is a specific provision that the requested Party shall provide upon request the information even though that Party may not need such information for its own tax purposes.
7. There is a specific provision for providing banking and ownership information.
8. The Agreement also allows exchange of past information in criminal tax matters.

What is TIEA agreement?

• The TIEA(Tax Information Exchange Agreement) is to promote international co-operation in tax matters through exchange of information.
• The TIEA was developed by the OECD Global Forum Working Group on Effective Exchange of Information (“the Working Group”). The Working Group consisted of representatives from OECD Member countries as well as delegates from Aruba, Bermuda, Bahrain, Cayman Islands, Cyprus, Isle of Man, Malta, Mauritius, the Netherlands Antilles, the Seychelles and San Marino.
• This Agreement is the outcome of the work undertaken by the OECD to address harmful tax practices.
• One of the key measure in determining harmful tax practices is the lack of effective exchange of information. The mandate of the Working Group was to develop a legal instrument that could be used to establish effective exchange of information.
• The Agreement represents the standard of effective exchange of information for the purposes of the OECD’s initiative on harmful tax practices.
• This Agreement, was released in April 2002. Where it is not a binding instrument but contains two models for bilateral agreements. But so far a number of bilateral agreements have been based on this Agreement.

What is ISLE OF MAN?

The Isle of Man, otherwise known simply as Mann, is a self-governing British Crown Dependency. It is  located in the Irish Sea between the islands of Great Britain and Ireland, within the British Isles. Queen Elizabeth II is the head of state, who holds the title of Lord of Mann. The Lord of Mann is represented by a Lieutenant Governor. The island is not part of the United Kingdom, but its foreign relations and defence are the responsibility of the UK Government. Although it does not usually interfere in the island's domestic matters, its "good government" is ultimately the responsibility of the Crown (i.e., in practice, the Government of the United Kingdom).