The British territory of Bermuda signed a tax-information exchange agreement with the Netherlands today.  This is Bermuda’s 12th such agreement, thus fullfilling the OECD’s requirement that states sign 12 information exchange agreements.  According to Dow Jones:

The Bermudan government said Monday that it has signed a tax information-exchange agreement with the Netherlands which allows it to meet international standards on tax-haven transparency…

The Organisation for Economic Cooperation and Development has said that tax havens must sign 12 such agreements with other nations to demonstrate they are committed to operating in a transparent manner and to meet its internationally- agreed tax standard.

The tax agreements are designed to allow countries to request information from other financial centers, including those viewed as tax havens, which allows them to levy the right amount of domestic tax on their citizens.

Unfortunately, the story fails to point out that tax-information exchange agreements which (like this one) do not require automatic exchange of tax information, are of little practical use.  Certainly this is a move in the right direction, but information exchange by request forces the requesting country to know the information that they’re requesting before they request it.  A scenario akin to receiving the combination for a locked safe, after you have succeeded at opening the safe.

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