The British Virgin Islands (BVI) government entered into its twenty-sixth tax information exchange agreement (TIEA) with the Government of Japan on 18 June 2014.
This new TIEA is not present in force but will enter into force on the thirtieth day after completion of the domestic implementation procedures by both the BVI and Japan. Under the BVI’s domestic regime TIEAs are implemented through subsidiary legislation under the Mutual Legal Assistance (Tax Matters) Act, 2003 (MLAT). Historic practice shows that TIEAs tend to be fully implemented and come into force approximately one year following signing.
The BVI-Japan TIEA is essentially consistent with the OECD standard model template for TIEAs. It provides for the assistance through exchange of information that is foreseeably relevant to the administration or enforcement of the laws of the BVI and Japan concerning taxes covered by the TIEA. In the case of the BVI the competent authority is the Financial Secretary or an authority designated by him in writing i.e. the International Tax Authority and the competent authority in the case of Japan is the Minister of Finance or his authorised representative. The BVI-Japan TIEA applies to taxes of every kind and description imposed by the BVI and Japan except that the TIEA shall not apply to taxes imposed on behalf of political subdivisions or local authorities of the BVI or Japan.
The requesting party under the TIEA must provide information on the identity of the person that is the subject of the request, the period of time with respect to which the information requested is required for the tax purposes of the requesting party, the nature of the information requested and the form in which the requesting party would prefer to receive the information, the tax purposes for which the information requested is sought and the reason for believing that the information requested is relevant to the administration or enforcement of the laws of the requesting party, reasonable grounds for believing that the information requested is held by the requested party or is in possession or control of a person who is within the territorial jurisdiction of the requested party, to the extent known, the name and address of any person believed to be in possession or control of the information requested and a statement that (i) the request is in conformity with the laws and administrative practices of the requesting party, (ii) if the information requested was within the territorial jurisdiction of the requesting party then the competent authority of the requesting party would be able to obtain the information under the laws or in the normal course of administrative practices of the requesting party, (iii) the request is in conformity with the BVI-Japan TIEA and a statement that the requesting party has pursued all means available within its territorial jurisdiction to obtain the information requested, except those that would give rise to disproportionate difficulties.
The BVI-Japan TIEA does provide for the possibility of declining a request on several grounds, for example, where the request of the requesting party is not made in conformity with the TIEA, where the requesting party has not pursued all means available within its territorial jurisdiction to obtain the information requested or where the disclosure would be contrary to public policy.
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