BDA Finishes Tax Negotiations With Indonesia
Minister of Finance Paula Cox announced today [June 14] that Bermuda and the Republic of Indonesia have completed negotiations of a bilateral tax information exchange agreement [TIEA].
The TIEA is expected to be signed later this year after both countries’ internal approval processes have been completed. The TIEA will provide for a full exchange of information on criminal and civil tax matters between the two countries.
Negotiations took place at Bermuda’s Ministry of Finance, in Hamilton, the week of June 7th, at which time discussions on a number of issues of common interest also took place. Bermuda’s Ministry of Finance (Treaty Unit) welcomed the delegation of the Directorate General of Taxes of the Ministry of Finance of the Republic of Indonesia.
Minister Cox said, “I am delighted today for Bermuda to have concluded negotiations of this agreement with the Republic of Indonesia. Indonesia has the remarkable distinction of being among the few G20 members to have posted growth during the recent financial crisis. Moreover, Indonesia is the third largest Muslim country in the world. Together, Bermuda looks to the Republic of Indonesia as a key strategic relationship we are keen to foster.
“Indeed, as the negotiations for this TIEA were held in person in Bermuda, a valuable opportunity was provided for the Indonesian Ministry of Finance to get a more rich and fulsome view of Bermuda and our success as a well-established and well-regarded financial centre with a strong regulatory regime. The Indonesian delegation were particularly delighted to convene with His Excellency the Governor during their time in Bermuda, whose distinguished history includes acting as British Ambassador to Indonesia.”
The Minister continued, “Currently, there are 62 entities in Bermuda with an Indonesian interest, and we expect this number to grow exponentially as our economic and political ties with Indonesia are strengthened and deepened. This agreement is a significant step forward both in enhancing business ties and investment opportunities between Bermuda and Indonesia but it will also facilitate Bermuda expanding our offerings in the realm of Islamic structured finance, including both conventional and Shari’iah investment funds. It is likely that the global market for Islamic insurance, or Takaful, will continue to grow, opening exciting possibilities for Bermuda reinsurers.
“Finally, Bermuda, in its capacity as a Vice Chair of the Steering Group of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes works closely with the Republic of Indonesia, and we very much look forward to welcoming delegates from Indonesia to Bermuda next year when we host the 2011 Global Forum.”
Bermuda currently has 21 signed agreements with provisions for the exchange of information for tax purposes. Bermuda has signed TIEAs with the United States, Australia, United Kingdom, New Zealand, the Nordic countries (Sweden, Norway, Finland, Denmark, Iceland, Greenland, Faroe Islands), Netherlands, Germany, Ireland, Netherlands Antilles, France, Mexico, Aruba, Japan, and Portugal. Further, Bermuda has a double taxation agreement with the Kingdom of Bahrain.
Bermuda’s proposed TIEA with the Republic of Indonesia includes all standard means to ensure due process is followed in tax information requests to Bermuda, including, for example, provisions to protect the confidentiality of information provided, as well as adhering to public policy, provisions related to protecting legal privilege, and to ensure that requests for information from Indonesia are relevant to tax investigations being conducted by Indonesian authorities.
