Finance Minister Paula Cox travelled to Washington D.C. last week to sign a tax information exchange agreement with the Australian government.

The agreement followed a commitment Bermuda made with the OECD in 2000 to promote global tax cooperation.

Ms Cox, in an issued press statement, said the treaty with Australia marks the first agreement that Bermuda has concluded in accordance with a commitment to ban harmful tax practices more than five years ago.

In June 2000, Bermuda committed to the principles of fair tax competition promoted by financial watchdog, the Organisation for Economic Cooperation and Development, better known as the OECD.

A controversial annexe to the agreement laid out the extent of Bermuda?s commitments, but the document has never been made public.

In recent years as well Australia tax officials have scrutinised its citizens dealings with Bermuda entities after it was discovered that a significant amount of the flow of funds in and out of Australia were going through the Island.

Some of the transactions were ruled legitimate, others raised the eyebrows of tax authorities down under.

Now both countries have signed on for what amounts to a bilateral tax information exchange agreement.

Officials from the two countries met in Bermuda for a first round of negotiations in May 2004 and then again in August, ahead of the November signing.

The agreement, which takes effect in January, provides for the exchange of information, when requested, on tax matters. Provisions to protect confidentiality of certain information are built into the agreement, the statement said.

Ms Cox said that because Bermuda, which does not have income tax, sees ?no direct benefit from an exchange of information regarding its tax system?, the Finance Ministry sought some other ?measurable and reciprocal benefit? for Bermuda, such as provisions for improved commercial relations between Bermuda and Australia.

She sited recent recognition of the Bermuda Stock Exchange by Australian authorities as an example of the positive relations the two nations can forge.

Financial Secretary Donald Scott accompanied Ms Cox to Washington for the signing with Australia. And Assistant Financial Secretary Wayne Brown also on hand before heading to Melbourne, Australia for an OECD meeting.