The
Ukrainian Revenue Ministry enjoys an opportunity to
exchange tax
information with the most popular
"tax havens/secrecy jurisdictions"
(the British Virgin Islands, Belize, the Isle of Man, Gibraltar,
etc.)
These
opportunities
opened
to the Revenue Ministry by the recent
ratification
of
the
Convention on
Mutual
Administrative
Assistance
in Tax Matters
(hereinafter
–
the
"Convention")
by the Government
of
Belize
as
well as the extension of its application by the United Kingdom
and
the Netherlands
to
a number of their overseas territories. In addition, the Convention
has been already signed,
but
not yet
ratified
by
such
popular
secrecy
jurisdictions
as
Switzerland, Luxembourg and
Liechtenstein.
Jurisdiction
|
Subordination
(for
dependent territories only)
|
Effectiveness
(according
to www.offtax.com)
|
Aruba
|
The
Netherlands
|
1
September 2013
|
Belize
|
1
September 2013
|
|
The
Bermudas
|
The
UK
|
1
March 2014
|
The
British Virgin Islands
|
The
UK
|
1
March 2014
|
Gibraltar
|
The
UK
|
1
March 2014
|
The
Cayman Islands
|
The
UK
|
1
January 2014
|
Liechtenstein
|
Signed
on 21 November 2013
(not
ratified yet)
|
|
Luxemburg
|
Signed
on 29 May 2013
(not
ratified yet)
|
|
The
Isle of Man
|
The
UK
|
1
March 2014
|
Switzerland
|
Signed
on 15 October 2013
(not
ratified yet)
|
What
follows is the possible ways of exchanging
information in accordance with the
Convention:
Exchange
of information on request - information
is being made available to the Revenue Ministry based on its request.
Automatic
exchange of information – the Revenue
Ministry and revenue authorities of a secret jurisdiction exchange
certain information automatically. In order for this to work, the
relevant procedures should be agreed on by the parties. It seems to
be clear that such procedures are not agreed on yet.
Spontaneous
exchange of information – the revenue
authority of a secret jurisdiction detects certain activity that may
adversely affect the tax revenues in Ukraine and forwards the
respective information to the Revenue Ministry.
Simultaneous
tax examinations – the Revenue
Ministry and the revenue authority of a secrecy jurisdiction conduct
simultaneous examination of certain taxpayers. To make this possible,
there must be relevant procedures approved. Such procedures are not
approved yet.
Tax
examinations abroad – the
representatives of the Revenue Ministry are eligible, subject to the
permission of the revenue authority of a secrecy jurisdiction, to
take part in tax examinations conducted in such a jurisdiction.
Further
to the exchange of information, the Convention enables the Revenue
Ministry:
-
To recover tax claims abroad (for example, where a
secrecy jurisdiction-resident carries out its activities in
Ukraine making up a permanent establishment
without the registration of
it with the tax authorities and accounting
for corporate income tax);
-
To forward documents for
servicing them upon residents of
secrecy jurisdictions.
Expectations
and prospects. A great deal will depend
on the approach of secrecy jurisdictions to exchange of information
(on the one hand, there is an obligation to stick to their
international commitments, on the other hand, they clearly understand
that active disclosure could lead to an outflow of clients interested
in their services).
In
this context, it is worth mentioning the case of MH
Investments and JA Investments v Cayman Islands Tax Information
Authority decided in September 2013 by
the Cayman Islands Grand Court.
The
Australian Taxation Office asked the Tax Information Authority of the
Cayman Islands to provide information on
companies whose ultimate beneficial owners allegedly were two
Australian accountants. The purpose of the request was to confirm the
connection of the aforesaid accountants to such companies and issue
them with additional tax charges based in light of this fact. The
request was made based on a tax information exchange agreement
between the Cayman Islands and Australia (very similar in nature to
the Convention).
The
Tax Information Authority of the Cayman Islands complied with the
request. The requested information was demanded from the registered
agent and given to the Australian Taxation Office.
Cayman-registered
companies that were subject to the information request believed that
the information had been provided in
violation of the established
procedures. They
appealed to the court so as to compel the
Tax Information Authority of the Cayman Islands to withdraw the
information from the Australian Taxation Office. At the hearings,
the court found the
violations of procedures and allowed
the claim. The violations include, among other things, as
follows:
-
Providing information for
a period not covered
by the agreement on exchange
of information;
-
Failure to obtain a
prior consent of the court of the Cayman
Islands for the use of
the information during court proceedings
in Australia;
-
Failure to notify the companies of the
informational request (in accordance with
the domestic laws of the
Cayman Islands the provision of information
without the knowledge of the
companies concerned is only possible for
criminal matters, which was not the case in
the situation in question).
Interestingly,
the Australian Taxation Office ignored the
judgment of the Cayman Islands Grand Court. They appealed to
the Australian court
with a request to permit the use of the
information obtained from the Cayman
colleagues in their tax evasion proceedings. In
October 2013 the Australian Federal Court
allowed the claim.
*
- Photo from wikipedia.org
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