Mutual Legal Assistance (Tax Matters) Order, 2016 (SI 2016 No. 28)

Summary

This Order brings into force, under the Mutual Legal Assistance (Tax Matters) Act, 2003, a Tax Information Exchange Agreement (TIEA) between the Government of the British Virgin Islands and the Government of the Isle of Man. The Schedule reproduces the full text of the Agreement, which governs how the two jurisdictions' competent authorities exchange information for tax administration, enforcement and criminal tax investigation purposes.

• Scope: Applies to income tax (both jurisdictions), and additionally payroll tax and property tax in the BVI; extends automatically to any substantially similar taxes introduced later.
• Information covered: Requires each Party's competent authority to be able to obtain and provide information held by banks, other financial institutions, nominees, trustees, and information on legal and beneficial ownership of companies, partnerships, foundations, and (for trusts) settlors, trustees, protectors, enforcers and beneficiaries.
• Exchange mechanisms: Provides for exchange of information upon request, automatic exchange, and spontaneous exchange, plus a procedure for tax examinations abroad by one Party's officials in the other's territory.
• Confidentiality: Information exchanged must be kept confidential, used only for the purposes stated in the Agreement, and may not be disclosed to any other jurisdiction.
• Response timeframes: The requested Party's competent authority must confirm receipt and flag deficiencies within 60 days of a request, and must inform the requesting Party if it cannot supply the information within 90 days of receiving a complete request.
• Grounds to decline: A request may be declined if it is not in conformity with the Agreement, if the requesting Party has not exhausted domestic means (absent disproportionate difficulty), or if disclosure would be contrary to public policy, subject to legal privilege, or would reveal a trade secret.

The obligations under the Agreement fall primarily on the Parties' competent authorities (the BVI Financial Secretary and the Isle of Man Assessor of Income Tax), who must respond to and, where agreed, automatically transmit tax information. Private entities such as banks, financial institutions, trustees and companies are affected indirectly, as they may be required to hold and produce the underlying information when a valid request is made.

Key obligations

• The requested Party's competent authority must confirm receipt of an information request and notify any deficiencies within 60 days of receipt
• If the requested Party cannot obtain and provide the requested information within 90 days of receiving a complete request, it must immediately inform the requesting Party of the reasons
• Each Party must ensure it has authority to obtain and provide, on request, information held by banks, other financial institutions, nominees, trustees, and beneficial ownership information for companies, partnerships, foundations and trusts
• All information exchanged under the Agreement must be kept confidential and used only for the purposes specified in Article 1, and may not be disclosed to any other jurisdiction
• Each Party must notify the other of any substantial changes to taxation or information-gathering measures affecting obligations under the Agreement

Applies to

banks, other financial institutions, trustees and nominees acting in an agency or fiduciary capacity, companies, partnerships, foundations, collective investment funds or schemes

Deadlines

• 30th day after receipt of the later notification of completed domestic procedures: Date on which the BVI Isle of Man Tax Information Exchange Agreement enters into force
• periods beginning on or after 1 January 2016: Automatic exchange of information under Article 8, and application of the Agreement to other tax matters, takes effect for taxable periods from this date
• 60 days of receipt of a request: Requested Party must confirm receipt and notify the requesting Party of any deficiencies in an information request
• 90 days of receipt of a complete request: Requested Party must inform the requesting Party if it has been unable to obtain and provide the requested information