The UK and Guernsey governments have signed a tax information exchange agreement (TIEA) in a bid to prevent tax evasion.
TIEAs allow governments to enforce their domestic tax laws by exchanging information relevant to a tax matter on request.
The governments have also agreed to adjust the requirements of the 1952 arrangement to avoid double taxation on income and will add provisions on the taxation of income from pensions plus a mutual agreement procedure.
"This new tax information exchange agreement represents a significant step in our efforts to counter and prevent tax evasion and avoidance," said the financial secretary to the Treasury, the Rt. Hon Stephen Timms MP.
The agreement will enter into force as soon as both governments have completed the necessary legislative procedures.
This is the fourth TIEA signed by the UK which has one in place with Bermuda, the Isle of Man and the British Virgin Islands.
Guernsey has previously signed TIEAs with the US, the Netherlands, Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden.
The agreement can be read at: http://www.hmrc.gov.uk/international/guernsey-eol.pdf and will be laid as Schedules to a draft Order in Council for consideration by the House of Commons in due course.
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