Isle of Man, a major tax haven, became the first British dependency to sign an agreement with the United Kingdom (UK) to share financial account information. The agreement, signed on October 10, 2013, will require the Isle of Man to automatically provide a wide range of tax and financial account data to the UK. Officials of Her Majesty’s Treasury said that to minimize redundancy and regulatory burdens on financial institutions, the agreement closely follows the provisions of the Intergovernmental Agreement (IGA) that the US and UK signed under the Foreign Account Tax Compliance Act (FACTA).
Twelve days later, two more British dependencies that are offshore tax havens, The Isles of Jersey and Guernsey, ratified similar agreements with the UK. The Isles of Jersey and Guernsey on October, 22 agreed to participate in an automatic financial account information sharing agreement with Her Majesty’s Revenue and Customs (HMRC). The stated goal of the agreements is to reduce tax evasion, increase tax revenue and assure that the correct taxes are paid.
Under their agreement with the UK, the dependencies agree to follow a framework to enhance tax information reporting in line with FATCA principles.
British officials say they also seek similar agreements with other UK dependencies, including the Cayman Islands, Turks and Caicos Islands and the British Virgin Islands.
FATCA, which seeks to curb tax evasion by US citizens through foreign accounts, is set to take effect July 1, 2014. It requires foreign financial institutions to inform the US Internal Revenue Service about US persons for whom they maintain accounts with more than $50,000. The US has signed eight IGAs and is negotiating with 50 countries to sign similar agreements. The UK is undertaking similar effort with its dependencies.