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US and Gibraltar sign agreement to exchange data on tax matters

Tim Geithner and Chief Minister Peter Caruana

United States Department of the Treasury and the Government of Gibraltar announced in London in the framework of the G20 summit that the two countries have signed an agreement to allow for exchange of information on tax matters between the United States and Gibraltar, reports the Gibraltar Chronicle.

The agreement was signed by US Treasury Secretary Tim Geithner and Gibraltar Chief Minister Peter Caruana in. The event took place at the Churchill Hotel, the base for the US delegation at the G20 in advance of the G20 meeting, where the issue of offshore tax evasion and strengthening the implementation of international standards by offshore financial centres will be a topic of discussion.

Mr Caruana told the Chronicle that the move allows Gibraltar “to in this way signal at the highest level that it is a mainstream quality finance centre.”

Mr Geithner last week said he was hopeful that the meeting of leaders from the world's 20 largest economies would produce a road map for reform that will stop global banks from “shipping risk” to lesser regulated domains, as he announced sweeping changes to the US own regulatory system.

“Our hope is that we can work with Europe on a global framework, a global infrastructure which has appropriate global oversight, so we don't have a Balkanised system at the global level, like we had at the national level,” he said last week.

President Obama’s 2010 budget calls for a robust portfolio of Internal Revenue Service (IRS) international tax compliance initiatives.

“The President’s budget makes a commitment to reduce international tax avoidance. As part of this commitment, the Treasury Department is embarking on an ambitious effort to deal with offshore compliance as evidenced by today’s agreement with Gibraltar,” said Mr Geithner.

“I will continue to demand transparency from countries on behalf of American taxpayers. I look forward to Gibraltar’s cooperation with the United States and to this agreement serving as an example for other financial centres around the world.”

Mr. Caruana said he was “delighted that our first agreement of this kind is with the United States. Gibraltar is committed to the OECD standard and the offer of such an agreement is open to other countries. Properly regulated exchange of information has become increasingly important. We look forward to co-operating with the United States under this agreement. As part of the European Union, Gibraltar already complies with EU standards of financial regulation and exchange of information”.

The agreement allows for the exchange of criminal tax information relating to any taxable year and civil tax information relating to taxable years beginning after 2008. According to DOW Jones reports it calls for Gibraltar to provide the U.S. with information on bank accounts in Gibraltar.