Bermuda signs tax information exchange agreement with India

The signing of the agreement took place at a ceremony at Ministry of Finance in New Delhi, India and was attended by Premier Dr. Ewart Brown and Minister of State for Finance S.S. Palanimanickam, who signed the agreement for India.

Also in attendance was Minister of Environment, Youth & Sport Glenn Blakeney, executive aide to the Premier Dale Jackson, Ven Subramanian, and representing India’s Ministry of Finance, Sanjay Mishra, joint secretary, Kamlesh Varshney, director, and Manish Sareen, under secretary.

This TIEA marks Bermuda’s 23rd agreement.  It provides for a full exchange of information on criminal and civil tax matters between the two countries, consistent with the internationally agreed standard for transparency and exchange of information for tax purposes set by the Organization for Economic Cooperation and Development (OECD).  It also marks the first TIEA signed by India.

The agreement exempts Bermuda from punitive measures that apply to India’s listed countries, such as the application of CFC rules, expense deduction rules, special tax rules, and capital gains realized by non-resident entities, amongst others.

Negotiations for this agreement took place in New Delhi, India, on February 9 through 10, 2010, at the Ministry of Finance. 

Bermuda’s negotiation team included Wayne Brown, assistant financial secretary, Laura Hershey, treaty advisor, and Huw Shepheard, crown counsel.

Following the signing, Paula Cox, who remained in Bermuda as Acting Premier, commented on the signing of the agreement.

“Presently, Bermuda ranks as one of the highest providers in the world of foreign direct inflows (FDI) to India,” said Acting Premier Cox.

“In fact, Bermuda is 15th on the list of Foreign Direct Investments into India and with the TIEA, it could very well get into the top 10 in future.  Currently, there are 120 entities in Bermuda with Indian interests. This agreement will further enhance investment opportunities between our two countries and open new avenues for funds domiciled in Bermuda to directly invest in India. Moreover, with the increasing liberalisation of the Indian insurance sector, and the recently passed civil nuclear liability bill passed by the Parliament of India, further opportunities will be available for insurers and reinsurers in Bermuda.”

India’s Minister of State for Finance, Mr. Palanimanickam, speaking on the occasion, said: “It is a great occasion for India to be signing its first TIEA with Bermuda. The Agreement is important in the perspective of efforts made by Global Forum to build an effective system for exchange of information around the world. India being the Vice Chair of Peer Review and Bermuda being the Vice Chair of Global Forum are playing important roles in this work. We are confident that the relationship between the two countries would be strengthened with this Agreement.”

In addition to the Tax information Exchange Agreement, Bermuda and India are presently concluding negotiation of a Memorandum of Understanding on Economic Trade and Technical Cooperation which provides a framework for deepening economic and commercial relations between the two jurisdictions.

Both Bermuda and India last week successfully completed the first phase of a peer review process conducted by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes and attained the status of “all elements met”.

Bermuda and India were the only two jurisdictions’ reports of eight submitted for adoption to the Global Forum to have met all the criteria identified by the peer review methodology.

Bermuda will welcome India’s delegates at the 2011 OECD Global Forum on Transparency and Exchange of Information for Tax Purposes in Bermuda in May 2011.  At this meeting, a further 54 peer review reports will be submitted for adoption by the Global Forum, including the majority of OECD and G-20 countries, many of whom are undergoing combined Phase 1-2 reviews.