The rough and tumble of anti-capitalist protests continued in the City of London yesterday. Bermuda has been doing some jostling of its own to avoid being branded a secretive tax haven along with less scrupulous jurisdictions. *Newscom photo
The rough and tumble of anti-capitalist protests continued in the City of London yesterday. Bermuda has been doing some jostling of its own to avoid being branded a secretive tax haven along with less scrupulous jurisdictions. *Newscom photo
Threatened with sanctions and with being named and shamed, the world's low-tax jurisdictions have in recent months begun to shed their layers of secrecy.

Even Switzerland, which has built a hugely profitable industry around confidentiality for the super-rich, has taken major steps toward cleaning up its act.

The standard way for countries to demonstrate they are transparent and cooperative is to sign Tax Information Exchange Agreements (TIEA) with other countries. Bermuda signed a prototype of such an agreement - one of the first of its kind - with the United States in the 1980s.

The treaty allows the U.S. to request and receive information about any tax paid by companies and individuals on the island. Bermuda can request the same in return. If a country has signed a TIEA with another country, they can request tax information not only from that country but also from any other country with which that country has signed a TIEA. The effect is to cause an expanding web of transparency.

The Organisation for Economic Cooperation and Development (OECD), which represents 30 of the world's richest economies, has said countries should sign a minimum of 12 TIEAs in order to prove they have nothing to hide. Since last year's G20 meeting, when the prospect of sanctions against tax havens was first raised, jurisdictions have been scrambling to meet that target.

More treaties ahead

British Crown Dependency Jersey has singed 12 TIEA's since July 2007, bringing its total to 13. Other U.K. territories The Isle of Man and Guernsey have bought their totals up to 14 and 13 respectively. All three countries were included on the 'white list.'

To date, Bermuda has signed TIEAs with only three countries: the States, the U.K. and Australia. Minister of Finance, Paula Cox will sign eight more later this month: with the seven Nordic countries and New Zealand. Agreements with Germany and several other countries are in the pipeline.

Bermuda has also set up a formal unit within the MOF that works exclusively towards signing tax treaties. Minister Cox told the Bermuda Sun that Bermuda has been working steadily on signing TIEAs with terms that are fully in the island's favour, while other countries have rushed through agreements in advance of G20 that may not be fully thought through.

She said: "TIEAs are not press-button instruments; there are pre-meetings and discussions and negotiations to get to the stage of an agreed form of wording that has been blessed by national Governments. We are in a leading position. We did not just start negotiations on the eve of midnight."