The Tax Information (Exchange and Mutual Administrative Assistance) Ordinance CAP 3.18 (“TIO”)1 came into force in December 2009 in the Turks and Caicos Islands (“TCI”). The TIO’s purpose is to give effect to the terms of agreements between the Turks and Caicos Islands Government (“TCIG”) and other jurisdictions with respect to the exchange of information relating to taxes and mutual administrative assistance regarding tax matters.2
The TIO is of relevance to permanent and temporary residents of TCI who choose to purchase property, do business, set up companies or trusts or open bank accounts. As the TCI commonly attract foreign investment, it has generally become the source of economic activity from non-residents. Often times these non-residents are citizens of other countries with their own tax regimes and laws applicable (in certain cases) to residents and non-residents of TCI.
At the present time, the TCIG has entered into Tax Information Exchange Agreements (“TIEA”) for the exchange of information with numerous countries including, Canada, Ireland and the United Kingdom and Australia. The aforementioned jurisdictions are important as TCI commonly receives investments from individuals and corporations within these jurisdictions.
TIEAs allow for the competent authorities of one jurisdiction to partner with and exchange information in tax matters in order to provide assistance to each other in regard to criminal, civil and administrative tax matters. When a request is made for information, that request and the information gathered shall be treated at all times as confidential and only used for the purpose of the administration and enforcement of the requesting party’s tax laws. The information cannot be passed to another party or country without consent.3
The TIO permits a “competent authority” (in TCI the Permanent Secretary, Finance) to present notice of a request from a cooperating authority to any individual or company and request tax related information.4 The power of a competent authority to request information is only protected from disclosure on the grounds of legal privilege. This means that communications with a legal professional where legal privilege or solicitor-client privilege can be claimed would not be subject to disclosure pursuant to a section 5(1) request from a competent authority.5
A request from a competent authority should be treated with the utmost importance and all efforts should be made by any individual or company the subject or a request to effectively comply. Under most TIEAs upon receipt of a request, the receiving competent authority should be provided with sufficient time in order to comply and in turn request the sought after information from a company and/or individual within the receiving jurisdiction. TIEAs do not for the most part request specific information and documents, but rather request categories of documents. It is then up to the receiving party to comply as much as possible under their domestic law.
While a request under a TIEA may be challenged, it is rare that court challenges to the request will be successful. Rather, an individual or company the subject of a request should first consider what documents are responsive to the request, what documents would be privileged and therefore not disclosable and whether the request is consistent with the TIEA. When this assessment has been completed in most cases a request can be resolved without a large financial burden being placed on the party to whom a request is made.
If you are in receipt of an information request or request to produce information, or if you want to understand better how TIEAs and the TIO could impact your own rights and obligations in TCI please consult with the legal professionals at G&P.
1Tax Information (Exchange and Mutual Administrative Assistance) Ordinance CAP 3.18 (“TIO”).
2Section 3(1), TIO.
3Section 12(1), TIO.
4Section 5(1), TIO.
5Section 5(1), TIO.