Premier Paula Cox is hopeful that the Island can strengthen links with the world’s second biggest economy after she yesterday signed a tax information exchange agreement with China in a ceremony at Camden.

Wang Li, the deputy commissioner of China’s State Administration of Taxation, joined Premier Cox in inking the documents before an audience of politicians from all parties, Government officials and other dignitaries.

“This treaty is a significant step forward in cementing political and economic ties between Bermuda and China,” Ms Cox said.

“Currently there are 680 entities in Bermuda with a Chinese interest. In the negotiation of this TIEA, a framework was established for deepening economic and commercial relations between our two jurisdictions and in facilitating our outreach to other markets within Asia.”

Mr Li made it clear that China’s interest in the agreement, which creates a framework for exchange of information between the two jurisdictions on taxation matters, was to clamp down on tax dodgers.

He said this was China’s sixth TIEA. All of the first five were also with low-tax, offshore jurisdictions, namely The Bahamas, the British Virgin Islands, Guernsey, Jersey and the Isle of Man.

The globalisation of tax competition had caused an impact on the international tax order, Mr Li said. The TIEA, he added, would enable China and Bermuda “to work together to combat aggressive tax planning”.

China’s standard corporate tax rate is 25 percent, while income tax for individuals ranges from five to 45 percent, depending on income. Bermuda levies no income tax or corporate tax.

Officials from Bermuda and China have worked closely together, as joint vice-chairs, with Germany, of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes.

The Premier noted that this was a “historic” agreement between one of the largest and most influential countries in the world and one of the smallest. The TIEA is Bermuda’s 23rd, sin

Leila Madeiros, of the Association of Bermuda Insurers and Reinsurers (ABIR), welcomed the agreement.

“I think you can’t underestimate the significance of signing a TIEA with the People’s Republic of China,” she said. “It enhances the existing commercial platform, but it also solidifies a basis for mutual recognition and understanding of each other’s countries and systems.”

These spin-off benefits of the TIEA had the potential to be helpful to Bermuda re/insurers doing business in China and to those not already in the market who were seeking access, she added.

Many entities based in China, especially from Hong Kong, are listed on the Bermuda Stock Exchange (BSX).

BSX chief executive officer Greg Wojciechowski welcomed the TIEA and said it underscored Bermuda’s commitment to meeting OECD standards of cooperation on tax matters.

“Today’s development is a very important step toward developing deeper commercial ties with the People’s Republic of China,” Mr Wojciechowski said.

“As one of the world’s fastest growing economies, and given Bermuda’s reputation in its core areas of commercial expertise, I believe there will be many areas of mutual commercial interest which can be explored in the future.

“The signing of this important agreement will certainly provide a point of departure for the BSX to explore with its Chinese counterparts areas in which commercial cooperation can be developed.”