Bermuda could get a significant boost in business from Canada from a tax information exchange agreement (TIEA) just agreed by the two countries.

One of the terms of the deal gives subsidiaries of Canadian companies that are resident in Bermuda the right to repatriate profits to their Canadian parents without being taxed in Canada.

That effectively gives Bermuda a benefit normally reserved for countries that have a double-tax treaty with Canada, such as Barbados.

While the primary purpose of the TIEA is to provide for full exchange of information on criminal and civil tax matters, the spin-off benefits could be more significant for Bermuda.

Barbados has enjoyed a thriving business relationship with corporate Canada since 1980 when the Caribbean island signed its double-tax treaty with the Canada.

Canadian companies can set up a Barbados company to capture its foreign earnings. Such a company would pay Barbados tax at a maximum rate of 2.5 percent. The treaty allows those profits to be exempt from being taxed again when returned to Canada in the form of a dividend. Canada imposes some of the world's heaviest corporate tax rates.

International companies based in Bermuda pay a zero percent rate of corporate tax.

Ironically, the agreement comes in the same week as US President Barack Obama announced plans to clamp down on US international companies using offshore subsidiaries to trim their tax bills. In its statement on the TIEA with Canada, the Ministry of Finance said the Island had now concluded negotiations on 15 TIEAs — three more than the minimum required to qualify for the OECD's "white list".

"In signing the TIEA, Canada will extend an important benefit to Bermuda that had previously been conferred only to countries with which Canada has a double tax treaty in force," the statement added.

"Dividends of foreign affiliates that are resident in Bermuda that are paid to their Canadian parent companies out of the active business income earned in Bermuda will be exempt from Canadian taxation."

Ms Cox said the agreement was the result of months of negotiations, including the visit of Canadian official to the Island last year.