Bermuda has signed its 19th and possibly one of its most significant tax information exchange agreement (TIEA) with Japan, Government announced yesterday.

Finance Minister Paula Cox and Sumio Kusaka, Japan's Charges d'affaires ad interim, signed the bilateral agreement at a ceremony held at the Japanese Embassy in London.

It represents the first such agreement the Group of Seven (G7) country has signed and strengthens the links between the two nations, with a big percentage of Japanese insurance business placed in Bermuda and a significant number of the Island's companies having interests in Japan.

The agreement will allow for a full exchange of information on criminal and civil tax matters between the two countries, with a clause for prohibition of prejudicial or restrictive measures and a mini double taxation agreement providing benefits for Bermuda's students and pensioners.

The announcement follows a report in the Wall Street Journal last week which revealed that Stephen Timms, the financial secretary to the UK Treasury, said the G20 would need to look again at the current Organisation for Economic Co-operation and Development (OECD) information-exchange standards to see if they were tough enough to ensure that individuals and businesses cannot use low-tax jurisdictions to hide their money.

Bermuda has outpaced rival jurisdictions the Cayman Islands, which has signed 13 TIEAs and the British Virgin Islands, which has 16.

The OECD set a minimum standard for countries to sign 12 TIEAs and world leaders pledged to clamp down on tax havens at the G20 Summit in London in April 2009. British Prime Minister Gordon Brown wrote to all UK-affiliated offshore financial centres, including Bermuda, urging them to meet OECD standards by September last year, by which time Bermuda had ascended from the 'grey list' to the 'white list'.

"I am delighted today to sign the tax information exchange agreement with Japan, and particularly pleased to note that Bermuda is Japan's first TIEA partner," said Ms Cox.

"Negotiations with Japan were concluded in Bermuda in June 2009. As the first country with which Japan negotiated with, the Japanese delegation stated at that time that Japan intended to use the product of its negotiations with Bermuda as a model for all future negotiations with other financial centres for TIEAs. This was a tremendous compliment for Bermuda, which is looked to as a most respected and advanced financial jurisdiction with which a country can base its work.

"Already approximately 20 to 25 percent of Japanese property catastrophe business is placed in Bermuda, as well as five percent of property pro-rata business. With over 100 companies in Bermuda with Japanese interests, we see this agreement as enhancing opportunities for further foreign direct investment between our two countries and a great step forward in cementing the relationship between Bermuda and Japan." David Ezekiel, chairman of the Association of Bermuda International Companies said: "Japan has a major involvement in the Bermuda market by way of ownership in the international business sector and in trading with Bermuda-based companies. The treaty contains many useful benefits not only for the business sector but for individuals, including students who might be travelling to Japan for studies."

Brad Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers, said: "This TIEA is particularly noteworthy as Japan is the world's second largest economy and Japanese insurers have been active participants in the Bermuda market for years. Japan has a natural interest in the hurricane and earthquake reinsurance provided by many Bermuda companies."

Bermuda has now signed TIEAs with G7 countries Japan, France, Germany, the UK and the US, as well as Australia, Ireland, New Zealand, the Netherlands, the Nordic Group (including Denmark, Finland, Iceland, Norway and Sweden and their associated territories the Faroe Islands and Greenland), Netherlands Antilles, Aruba and Mexico. Negotiations have been concluded with, among others, Canada, Spain, Belgium and Portugal, with these agreements expected to be signed in 2010.