British Virgin Islands: TIEAs - A Modern Day Scylla And Charybdis?

Last Updated: 17 October 2016
Article by Jonathan Addo

Most Read Contributor in British Virgin Islands, October 2017

The British Virgin Islands operates one of the most robust and accountable regulatory systems in the world. It is more compliant with global financial regulatory standards and more transparent than many G7 countries including the UK and Germany. In recognition of the Territory's commitment to regulatory excellence, the BVI was placed on the OECD 'White List' in 2009. As a part of its continued commitment to promoting transparency and prevention of tax evasion, the BVI is a signatory to the Common Reporting Standard (the CRS), an OECD initiative that created a global automatic exchange of information between signatory nations. A fundamental part of the functioning of the CRS is the implementation of tax information exchange agreements (TIEAs). The BVI Government has signed and implemented 25 TIEA in recent years with jurisdictions such as Australia, Canada, China, France, Germany, India, Japan, the UK and the USA.

Latterly, onshore governments spurred by electorate concern at the apparent erosion of tax bases have shown a considerable appetite for seeking highly confidential fiscal information about BVI persons through the TIEA mechanism. The TIEA mechanism is not an arbitrary power however and has become open to abuse in an environment where offshore authorities are eager to appear cooperative.

Harneys is currently instructed to act for a number of BVI persons who have received TIEA requests seeking information regarding assets belonging to BVI companies named in the TIEA request and underlying beneficial ownership information. In the BVI, the International Tax Authority (the ITA) is a public body with functions under the Mutual Legal Assistance (Tax Matters) Act 2003 (the MLA). Harneys was instructed to seek leave to challenge the ITA's decisions to issue each of the Applicants with a Notice to produce information for the purpose of the BVI complying with a request from another State under a TIEA (the Request).

How to deal with TIEAs – Judicial Review?

Harneys acted swiftly in restraining the disclosure requirement under the Request and obtained leave to judicially review (ie legally challenge the executive decision to issue the Notice). Harneys, on behalf of the Applicants, contended that the Notices did not comply with the ITA's duty of procedural fairness. The Applicants submitted that they are entitled to be told which country has sought the information (under which TIEA), in respect of which taxpayer and for what tax period, and all other information in the Request to enable the Applicants to satisfy themselves and to make informed representations as to whether the Request and therefore the Notice are both invalid and whether it is appropriate for the Request to be acted on by the authorities of the BVI. In granting leave, Ellis J., sitting in the BVI High Court, agreed with Harneys' preliminary argument as articulated above.

The MLA and the TIEA

Section 5(1) of the MLA states that the Financial Secretary, or a person or authority designated by him, may, "for the purposes of complying with a request under [a relevant international Agreement], by notice in writing, require any person to provide such information as may be specified in the notice, provided that:

  1. the person is reasonably believed to be in possession or control of the information to which the notice relates, or
  2. the information requested is
  1. information held by a bank or other financial institution, or any person acting in an agency or fiduciary capacity, including a nominee or trustee, or any other person or entity
  2. information regarding the beneficial ownership of a company, partnership or other person or Entity

Therefore, a Notice can only validly be made if it is "for the purposes of complying with a request under [a relevant international Agreement]", ie a TIEA entered into between the BVI and another country. The validity of the Notice depends on the Request complying with the Agreement. To fail to comply with the Notice without lawful or reasonable excuse is a criminal offence, according to section 5(6). The relevant TIEA in the current case recognised in the Preamble that the Contracting Parties "will never engage in 'fishing expeditions'". The substance of the Agreement contains important limitations:

  1. Article 1 confines the information to that which is "foreseeably relevant" to tax liability
  2. Article 3 specifies the taxes which are covered
  3. Article 5.5(c) says that the Agreement does not create an obligation on a Requested State to obtain or provide "information in the possession or control of a person other than the taxpayer that does not directly relate to the taxpayer".
  4. Article 5.6 specifies the information which must be provided by the Requesting State. It includes: "the identity of the person under examination or investigation", "the period for which the information is requested", and "the tax purpose for which the information is sought and the reasons for believing that the information requested is foreseeably relevant to the administration or enforcement of the domestic laws of the Requesting Party".

The Notices

The ITA served notices on the BVI Companies. The ITA failed to provide the Applicants with the contents of the Request – and in particular the information provided under Article 5.6 of the Agreement – or with any of the following information:

  1. From which country the Request derives and to which authority the information is to be sent
  2. The identity of the relevant taxpayers
  3. The tax years under investigation or otherwise the relevant period of interest

Procedural fairness

Harneys argued successfully before Ellis J. at the leave stage for judicial review that Procedural fairness requires that if a recipient of a TIEA notice is to have an obligation to comply with a Notice, under pain of criminal penalties, they are entitled to be told the information provided under Article 5.6 of the Agreement. Without such information, the Applicants cannot make any effective representations to the ITA, or any effective submissions to the Court, about

  1. Whether the Request is valid under the Agreement: has the required information been supplied by the Requesting State and is the information sought "foreseeably relevant" and otherwise within the scope of the Agreement?
  2. Whether the Notice is valid as within the scope of the Agreement and whether it is appropriate to act on the Request

The ITA had a duty to comply with procedural fairness in the present context. The ITA is a public authority with a limited power under section 5(1). It may only issue a Notice if the Request complies with the Agreement. As Lord Bridge of Harwich said (for the Appellate Committee of the House of Lords) in Lloyd v McMahon [1987] 1 AC 625, 702-703, it is "well-established that when a statute has conferred on any body the power to make decisions affecting individuals, the courts will not only require the procedure prescribed by the statute to be followed, but will readily imply so much and no more to be introduced by way of additional procedural safeguards as will ensure the attainment of fairness". So it is no answer for the ITA to say that the MLA does not expressly impose requirements of procedural fairness. The law implies such obligations.

Nor is it an answer for the ITA to say it has considered whether the Notices comply with the Agreement. The law does not regard such an assurance as a substitute for procedural fairness which enables the Applicants to see the relevant information, and so form their own judgment on the validity of the Notices and to have the opportunity to make effective representations to the ITA and to the Court. It is a matter for the judgment of the Court, and not for the reasonable judgment of the ITA, to determine what procedural fairness requires: R (Osborn) v Parole Board [2014] AC 1115, paragraph 65 (Lord Reed for the Supreme Court). The demands of fairness will, of course, depend on the context. See R v Secretary of State for the Home Department ex parte Doody [1994] 1 AC 531, 560D-G (Lord Mustill for the Appellate Committee of the House of Lords). In the present context, fairness required that the BVI Companies be shown the Request, or at the very least a redacted version or a summary, because:

  1. The ITA is purporting to exercise a power to compel the Applicants to disclose otherwise confidential information to a body outside the jurisdiction. The power under section 5(1) is a limited one, confined to what is "for the purposes of complying with a request under" the Agreement. The Notice is lawful only if it is in furtherance of a Request which is valid under the Agreement and complies with the requirements of the Agreement.
  2. The power under section 5(1) is backed by criminal sanctions for any failure to comply.
  3. Section 5(1) of the MLA does not impose a duty on the ITA to comply with the Request. It has a discretion, which the legislature must have intended to be exercised fairly and reasonably.


The ITA relies on Article 8 of the Agreement which addresses confidentiality. However, Article 8 expressly recognises that the information provided by the Requesting Party may be disclosed to those affected. Article 8 states that the courts and administrative bodies of the Requested State may use the information for the purposes of implementing the Agreement, "including the determination of any appeal, or the oversight of [implementation of the Agreement]. For these purposes, information may be disclosed in public court proceedings or in judicial proceedings". Therefore, to the extent that BVI law requires disclosure to ensure a fair procedure, Article 8 so allows.

This is confirmed by the Commentary to the OECD's model TIEA agreement (on which the Agreement is very closely based). The Commentary states at paragraph 96 that Article 8 "means that the information may also be communicated to the taxpayer, his proxy or to a witness. The Agreement only permits but does not require disclosure of the information to the taxpayer. In fact there may be cases in which information is given in confidence to the requested Party and the source of the information may have a legitimate interest in not disclosing it to the taxpayer. The competent authorities concerned should discuss such cases with a view to finding a mutually acceptable mechanism for addressing them." Paragraph 94 of the Commentary explains that an important purpose of confidentiality is to protect the interests of taxpayers.

It is therefore plain that under the Agreement that:

  1. Procedural fairness to the taxpayer and his proxy is an important objective of the Agreement. Nothing in Article 8 prohibits disclosure to the taxpayer or his proxy
  2. The expectation is that the basis for the Request will be disclosed to those affected
  3. There may be exceptional cases where some of the information is confidential, but there was no evidence of that in the present case
  4. Article 8 is therefore inconsistent with the ITA's contention that it is obliged to keep the contents of the Request confidential. It does not breach Article 8 for the Court to decide, on a judicial review application challenging the Notice, that the ITA must disclose the Request in order to ensure fairness

Judicial authorities from other jurisdictions

The Applicants' contention that procedural fairness requires the disclosure of information in this context was supported by the authorities from Bermuda and Jersey. They are the judicial authorities to which Madame Justice Ellis referred in Brewcorp at paragraph 94. In Durant International Corporation v Attorney-General and Federal Republic of Brazil [2006] JLR 31, the Royal Court of Jersey heard a case concerning the Attorney General's refusal to disclose two letters of request from Brazil for information required for criminal investigations. Deputy Bailiff Burt stated at paragraph 37: "the powers to obtain information ... are strong powers which enable private and confidential material to be compulsorily disclosed. The need to investigate alleged criminal conduct must be balanced against the need for justice to be done to those who are the subject of such notices. We note that in the majority of cases to which we have referred, information was in fact disclosed, either by way of disclosure of the letter of request itself, a redacted version or a summary of its contents. We agree with the approach of the [Divisional Court] in [R (Evans) v Director of the Serious Fraud Office [2003] 1 WLR 299] that the interests of justice can usually be met if, when a request is made for disclosure of a letter of request, information is given as to the nature of the investigation and the exact source of the letter of request. We accept that in providing such information, the Attorney General will need to have regard to any concerns of the requesting authority as to particularly sensitive parts of the request, but in order to fulfil his duty of fairness, the level and degree of information supplied must be sufficient to enable the subject, if he thinks fit, to make representations on issues such as the lawfulness of the request and the general nature of the alleged offences and the investigation in the overseas jurisdiction. We also agree with the Court in Evans that, although the course we have suggested would normally be sufficient, there may be some cases where justice requires disclosure of the letter of request itself or a redacted version".

In The Minister of Finance v Bunge Ltd [2013] CA (BDA) 4 Civ, the Court of Appeal for Bermuda considered statutory provisions which were in very similar terms to the MLA. Evans JA held for the Court (at paragraph 22) that on the proper construction of the statutory provisions "the person on whom the notice is served is entitled to see, and the Minister is bound to produce, the terms of the Request, so far as they are relevant to the notice that is given." Evans JA agreed with the statement of the Judge at first instance that the Request could be "redacted to exclude any sensitive material." Evans JA said, "Without production of the terms of the Request, the person cannot know that the notice is valid." He added that procedural fairness "provides an independent ground for requiring production of the terms of the Request in a particular case." The Bermuda Court of Appeal noted at paragraph 21 that international agreements envisage disclosure of information.

In The Minister of Finance v AD [2015] CA (Bda) 18 Civ, the Court of Appeal for Bermuda applied the revised Bermuda legislation. For the Court of Appeal, Kay JA referred to procedural fairness at paragraph 15: "To the extent that the case for the Minister goes so far as to contemplate that the subject of an ex parte order may be fixed with its burden, reinforced by criminal sanctions, without being assured of a right of review and without being permitted to see the material upon which it is based, it is highly exceptional. Moreover, there is no overriding public interest such as national security, which might, in exceptional circumstances, justify a departure from the normal fundamentals of fairness." At paragraphs 21-23, the Bermudan Court of Appeal noted that international agreements envisage disclosure of information.

These authorities strongly support the contention that a requirement to provide information for transmission to a foreign authority must comply with procedural fairness: the person concerned is entitled to see the Request or at the very least the substance of what it contains. In none of these cases was a person required – as in the present case – to comply with a demand to provide information to a foreign authority without being told the identity of the authority, and the nature and details of the inquiry to which the information is relevant.


In the BVI, as the Court recognised in granting leave to challenge the Notices, there are clear and sacrosanct checks and balances to protect BVI persons and their interests and prevent the arbitrary use of executive power in providing information to authorities outside of the jurisdiction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.