Channel Islands maintain TIEAs still important

The Channel Islands maintain tax information exchange agreements (TIEAs) still have a future despite plans to move to automatic exchange agreements.

Although the Isle of Man will move to automatic exchange agreements, the Crown Dependencies say they will continue to sign TIEAs and believe they have a future in formalising agreements between jurisdictions.

TIEAs are bilateral agreements under which territories agree to co-operate in tax matters through exchange of information, while automatic exchange of information stops account holders from withholding tax details from the authorities.

"TIEAs will still have a strong future and formalise a process of checks and balances between jurisdictions," says Peter Niven, chief executive of Guernsey Finance.

Robert Kirkby, technical director at Jersey Finance, says TIEAs apply to all taxes, whereas the European Savings Directive (EUSD) which includes automatic exchange only applies to interest and income earned and not IHT, for example.

"TIEAs continue to have a role in the future for a few years yet as the EUSD is narrowly defined," he says.

John Spellman, director, Isle of Man Finance, says the move to automatic exchange of information acts as a differentiator from secrecy jurisdictions.

"It's a good test for us and differentiates us from other nations," he says.

Niven says automatic exchange of information puts pressure on the competition to increase transparency.

"The automatic information exchange will raise the bar, showing jurisdictions to be in the premier division of International Finance Centres," he says.