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Interesting facts about Tax Information Exchange Agreements (aka TIEA or TIA)

January 21, 2013 - by Nida U.

When planning to set up an IBC fair part of research needs to be done beforehand so that no unexpected surprises would suddenly affect either of us. TIEA is nothing to be scared of, however it is something that one should look at, understand what it is and what it does or not, before going on and establishing an offshore company.

What TIEA is?
By definition TIEA is a legal instrument used between two countries. TIEA is an agreement to exchange civil or criminal tax information upon request of one of these countries. This is a development of the OECD member countries that is meant to tackle issues and addresses harmful tax practices.

With or without TIEA it will eventually be possible for another government to receive requested information. So why fear choosing jurisdictions that have TIEA and not fear one that doesn’t? The core principle of TIEA is to speed up the exchange of information. As I mentioned one government can still receive needed information without having signed TIEA, however it will be much longer and more complicated process that involves lengthy investigations and court orders.

Anyhow, information exchange is not a quick and simple exchange! Tax heavens are independent and regulated governments. And having signed TIEAs will not make this government give out any information just like that! It still involves investigations before any information is released!

In general, company has to be managed in proper manner, i.e., seeking local legal tax advisors before establishing an IBC in order for it not to become a subject for investigation.

Thank you for reading my post! And you are welcome to leave comments, feedback, suggestions for other posts or contact me for more information.

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