Anti-tax Avoidance Exchange of Information Agreement With Gibraltar

Author: Professor Peter Surtees & Andrew Wellsted

On 11 July 2013 South Africa and Gibraltar signed an exchange of information agreement relating to tax matters. This is part of a growing practice, in which South Africa is an active participant. It reflects a global policy between fiscal authorities to address perceived tax avoidance by multi-national corporations.

The agreement obliges the competent authority of one signatory to provide the other with information “foreseeably relevant” to the administration and enforcement of the domestic laws of the parties concerning taxes. Unlike full double tax treaties, which list the taxes covered, this agreement covers “taxes of every kind and description imposed by the Parties at the date of signature of the Agreement”.

The requested party will use the powers its own legislation gives it to obtain the information, even though it is not required by the requested party for its own use. The requested party may depose witnesses and obtain authenticated copies of original records.

The respective tax authorities may not engage in fishing expeditions. Any request must be formulated with the greatest detail possible as to the identity of the person under examination or investigation, the period for which the information is required, the nature and form of the information, the tax purpose for which it is sought and the reasons for believing it is foreseeably relevant. The requesting party must also give grounds for believing that the information is in the possession of a person in the other jurisdiction and, if possible, who that person is, and must state that the request conforms with its laws and administrative practices, and state that it has pursued all means available in its own territory to obtain the information.

The authorities of one signatory may visit the other signatory where appropriate. And, needless to say, confidentiality is an essential requirement.

We can expect many more of these agreements where similar provisions do not already exist in tax treaties or where there is no treaty.