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India-British Virgin Islands Tax Information Exchange Agreement (TIEA)
On February 9, 2011, the government of the Republic of India and the government of the British Virgin Islands (BVI) signed a Tax Information Exchange Agreement (TIEA) in London, UK. TIEAs are agreements developed by the Organization for Economic Co-operation and Development (OECD) with the primary purpose of reducing harmful tax practices in the contracting states. Such agreements play a pivotal role in enhancing international cooperation between countries by facilitating the exchange of information pertaining to tax matters, particularly with regard to individuals hiding their assets in offshore tax havens like the British Virgin Islands.
The India-BVI TIEA applies to and encompasses taxes of every kind and description imposed by the central government in India and the British Virgin Islands, regardless of the manner in which they are levied. It also includes any similar taxes that may be imposed in the contracting states even after the signing of this agreement.
Here are key takeaways from the India-BVI TIEA:
- Criminal Tax Issues: The TIEA enables the sharing of data related to criminal tax issues.
- Provisions: The TIEA includes various provisions, such as information sharing, information confidentiality, denial of requests for information sharing, and the payment of relevant administrative fees.
- Territorial Access: Representatives from one country can enter the territory of the other contracting state, provided they have prior written consent from the individuals concerned, in connection with a request to interview individuals and examine records.
- Information Sharing: Tax-related information can be shared upon request, with the sharing being contingent on the acceptance or rejection of the request by the state.
- Confidentiality: Information received by the contracting states is treated as confidential and can only be disclosed to approved individuals and authorities.
- Mutual Agreement Procedure: The TIEA incorporates a mutual agreement procedure for the amicable resolution of disputes regarding the procedures agreed upon in the agreement.
Inference and Benefits
Countries like the British Virgin Islands and the Cayman Islands are known for their status as tax haven destinations with banking secrecy jurisdictions. Consequently, these nations have been attractive for corporations and individuals seeking to evade taxes. India has taken proactive steps to combat the generation of illicit funds resulting from tax evasion and corruption and has entered into Double Taxation Avoidance Agreements and TIEAs with numerous countries.
Under the India-BVI TIEA, any information deemed relevant for taxation purposes is to be disclosed by one state to the other contracting state. The British Virgin Islands continues to be a leading offshore center for active companies and partnerships, thanks to its lack of corporate tax for resident entities. With the TIEA now in effect, it is expected that Indian companies or partnerships in the British Virgin Islands, which have been utilizing this channel for purposes other than business, will be under stricter surveillance and government control.
Chandrawat & Partners specializes in international tax agreements and can provide expert legal counsel on the India-British Virgin Islands Tax Information Exchange Agreement and related matters. For comprehensive legal guidance or assistance regarding this agreement, please do not hesitate to contact us. We are committed to providing professional legal services and helping you navigate the intricacies of international tax laws.
For further information or to seek our expertise on this agreement or other legal matters, please reach out to us. We are here to serve your legal needs with the utmost professionalism and diligence.
To know more about DTAA relations between India and British Virgin Islands, please download our Guide.