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Timestamp: 2020-02-23 01:46:33
Document Index: 272691368

Matched Legal Cases: ['Art. 26', 'Art. 26', 'Art.26', 'Art.26', 'Art.26', 'Art. 26', 'Art. 26']

﻿ Symeou & Konnaris LLC, Publications, Exchange of information between Cyprus and foreign Tax Authorities on Tax matters and adoption of article 26 of oecd model agreement
Exchange of information between Cyprus and foreign Tax Authorities on Tax matters and adoption of article 26 of oecd model agreement
In the pages that follow, we will consider the amendment that has been made to the existing Cypriot domestic tax legislation (Ascertainment and Collection of Taxes Law 72(I)/2008) so as to facilitate the provisions of Art. 26 of the Organisation for Economic Co-operation and Development (“OECD’’) (The actual Art. 26 is attached as appendix A). The OECD model convention found in the Double Tax Treaty (“DTT”) agreements entered into by Cyprus. As a result of this, Cyprus has been included in the updated ’’White’’ list of jurisdictions that have substantially implemented the internationally agreed tax standard (attached as appendix B). The changes adopted are vital in ensuring the transparency of the Cypriot regime and strengthening its reputation and credibility as a financial centre.
The OECD provides a model DTT for cross-border tax issues for its 30 member states to be used as a basis for negotiating and concluding DTT between countries. The purpose of this Agreement is to promote international co-operation in tax matters through exchange of information.
Cyprus is one of the countries that voluntarily adopted the model agreement as a basis for its DTT’s although not a member of the OECD.
The Agreement was developed by the OECD Global Forum Working Group on effective exchange of information (“the Working Group”). The Working Group consisted of representatives from OECD 30 Member countries (Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States) as well as delegates from Aruba, Bermuda, Bahrain, Cayman Islands, Cyprus, Isle of Man, Malta, Mauritius, the Netherlands Antilles, the Seychelles and San Marino.
Many jurisdictions have recently taken similar steps, or indicated that they will soon do so. Examples include Singapore, Austria, Belgium, Luxemburg, Hong Kong, Liechtenstein and Switzerland, which have said they will adopt the content of Article 26 of the OECD’s Model Agreement.
The adoption and application of Art.26 above does not in any way affect the privileged communication of the legal profession (lawyer- client communication) and/or impose on a Contracting State the following obligations:
c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which, would be contrary to public policy (order public);
In simple terms the country from which the information is requested does not have the obligation to release information in the case when the release of information is against the law or public policy of this country.
Furthermore, states that have implemented Art.26 in its standard form agree to the exchange of information upon request, but not to the automatic disclosure of information. This means that the country seeking information must produce a substantiated request, naming the taxable person and the specific bank or describing the information requested in sufficient detail.
It must be noted that the Cyprus Tax Authorities in the vast majority of cases, do not have any information as to who the beneficiary of a particular company is because registration of Cyprus Companies can be done through the appointment of nominees to hold shares on behalf of the beneficial owners - whose identity remains secret. In addition privacy of the Cyprus International trusts’ constitution and membership, as well their transactions and activities are secured through the absence of registration or reporting requirements. International Trusts Law 69(I)/92, which regulates the establishment and administration of international trusts, section 11 prohibits any of the trustees or any other person, including government officials and officers of the Central Bank of Cyprus, from disclosing any information about the trust. Sections 11(2) and 11(3) provide that a Court may, by order, allow disclosure of information where such disclosure is of paramount importance to the outcome of the particular civil or criminal proceedings.
All the States that have adopted Art.26 agree to the exchange of information upon request, but not to the automatic disclosure of information. This means that the country seeking information must produce a substantiated request, naming the taxable person and the specific bank or describing the information requested in sufficient detail. Information will only be provided by the tax authority of Cyprus upon receipt of a written request from another. There must be sufficient grounds for the request including an adequate description of the person and the bank in question. “Fishing expeditions” are not permitted under Art. 26 in any way.
The requesting state should provide the Cyprus Commissioner of Inland Revenue Department (the “Commissioner”) with specific details of the reason for the request of information as follows:
• The identity of the person under examination;
• A description of the information requested and the nature and manner in which the requesting state wishes to receive the information from the Cyprus tax authorities;
• The tax purpose for requesting the information;
• The reason for belief that the requested information is held by the Cyprus tax authorities or is found in the possession or under the control of a person within the jurisdiction of Cyprus;
• The name and address of any person who may hold such requested information to the extent that such information can made available;
• A declaration that the provision of such information is in accordance with the legislation and the administrative practices of the requesting state and that where the requested information is found within the jurisdiction of the state in question, the relevant authority may obtain the information according to its laws and according to the terms of its ordinary administrative practices;
• A declaration that the requesting state has exhausted all means at its disposal within its jurisdiction to obtain the requested information, except where resorting to such means would have imposed an excessive burden;
Notwithstanding any other provisions or conditions set out above, the powers of the Commissioner are exercised only after the written consent of the Attorney General of the Republic has been expressly obtained on a case by case basis. Such consent will only be provided if there is justified, well founded suspicion that tax fraud or other international crime has taken place.
As a result the disclosure of any related information might be granted only if the above provisions of the law are met and taxable persons may appeal against the process if they do not agree with the process or do not consent to administrative assistance.
The entry of Cyprus to the European Union as well as the adoption and application of all relevant OECD and EU treaties and the new tax reforms in our legislation gives added value to Cyprus and now Cyprus more than ever is enjoying a very good reputation internationally as a safe, credible and reliable jurisdiction to do business with.
These changes enhance Cyprus position as an international financial centre as it remains a good location for investments to and from other European Union countries, Russia, CIS and many other locations as Cyprus based companies enjoy the lowest tax regime in the European Union and its role as an international financial centre is greatly enhanced.
The Legal privilege will be guaranteed to foreign clients on permanent bases. This is a key asset in a world where personal privacy is continuously under thread.
It should be noted that the conditions set out in the Cyprus Law as to facilitate the provisions of Art. 26 of the OECD model convention as described above should also be noted to in the case of a request for exchange of information under the Cyprus-Russia Double Tax Treaty , as amended by the Protocol initialled on April 16, 2009, by the representatives of the Ministries of Finance of the Russian Federation and Cyprus and It achieves the removal of Cyprus from Russia’s list of “Offshore Jurisdictions” and provides stability to the investors
It is our belief that investments in Russia through Cyprus will be increased and improved in the future with advantageous effects to all parties involved.
In writing this reference our goal is to give a general picture of the legal framework within which Cyprus has developed its policy on the subject matters. The materials contained in this reference are provided for general information purposes only and do not constitute legal or professional advice. Each transaction must be handled according to all the circumstances. Neither the author of this publication and/or Symeou, Konnaris & Co. LLC nor any of its partners or employees accepts any responsibility for any loss which may arise by acting or refraining from acting on the basis of this publication.
Progress made as at 1st April 2010 (Original Progress Report 2nd April 2009)
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St Vincent and the Grenadines Samoa
Jurisdiction Number of Agreements Jurisdiction Number of Agreements
1. The internationally agreed tax standard, which was developed by the OECD in co-operation with non-OECD countries and which was endorsed by G20 Finance Ministers at their Berlin Meeting in 2004 and by the UN Committee of Experts on International Cooperation in Tax Matters at its October 2008 Meeting, requires exchange of information on request in all tax matters for the administration and enforcement of domestic tax law without regard to a domestic tax interest requirement or bank secrecy for tax purposes. It also provides for extensive safeguards to protect the confidentiality of the information exchanged.
2. Excluding the Special Administrative Regions, which have committed to implement the internationally agreed tax standard.
3. These jurisdictions were identified in 2000 as meeting the tax haven criteria as described in the 1998 OECD report.
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