Improvements to Bermuda's legal infrastructure are needed to ensure that the Island has the framework to fully meet international standards in transparency on taxation matters.

That was the verdict delivered yesterday in Singapore by the Organisation for Economic Cooperation and Development's Peer Review Group, which cleared the Island to move on to a second review phase.

The 71-page report states that Bermuda has in place all the elements considered necessary to achieve international tax transparency.

It notes that the Island has significantly expanded its exchange of information (EOI) network over the past 18 months, by signing a string of tax information exchange agreements (TIEAs) and urges continuation of this policy.

However, it pinpoints areas in which implementation could fall short of the international standard and makes recommendations as to what should change.

One concern is in the domestic law applied to the Island's TIEAs, the International Cooperation Act.

The review found that this law includes two provisions that could allow the Minister of Finance to turn down a request for information under a TIEA — when the requesting party does not agree to pay the costs of providing the assistance, or when the Minister is not satisfied that the requesting party will keep the information confidential.

The report recommends that Bermuda should consider extending search and seizure powers, with appropriate preconditions as safeguards, for exchange of information requests made by all of Bermuda's TIEA partners.

Other recommendations are mainly to disclosure of ownership information to the authorities. They include:

• Where no penalties are provided, introduce effective sanctions against relevant entities that fail to comply with requirements to maintain and provide ownership and identity information.

• Private trust companies should be required to maintain relevant identity and ownership information.

• An obligation should be established for nominees to maintain relevant ownership and identity information where they act as the legal owner on behalf of any other person.

• Introduce consistent and binding requirements on relevant entities to maintain reliable accounting records, including underlying documentation, for a minimum five-year period.

The reports, on Bermuda and seven other countries, were the first phase of a global monitoring process that will keep pressure on jurisdictions to follow through on their EOI commitment.

The reviews were ratified and made public at the OECD Global Forum's 2010 meeting in Singapore yesterday, where Bermuda was represented by the Finance Ministry's Treaty Unit. The delegation is headed by Assistant Financial Secretary Wayne Brown, along with treaty adviser Laura Hershey, research officer Dennis Simons and legal adviser Shakira Dill, from the Attorney General's Chambers.

Bermuda will host the Forum's 2011 plenary meeting next spring and also shares vice-chair responsibilities for the Forum's Steering Group with China and Germany.

A second stage of the reviews, examining exchange of information practices, will take place by 2012.

Two countries, Panama and Botswana, will "have to adequately address the phase one recommendations before proceeding to a phase two review", the OECD said yesterday.

Those who joined Bermuda in coming through the first phase were the Cayman Islands, India, Jamaica, Monaco, Panama and Qatar.

The Cayman review identified a basic flaw, stating that the Caribbean offshore financial centre does not "presently have in place the legal framework to meet the international standard" in accounting information".

The weak areas identified in Bermuda's case appear to have been shared by others. The OECD said deficiencies identified in the first wave of reviews "commonly related to access to information including information on nominees, trusts and the need to maintain good accounting records".

More than 100 jurisdictions and observers are now part of the Global Forum, with Botswana, Jamaica and Kenya welcomed as the newest members this week. All these jurisdictions, as well as others identified by the Global Forum as relevant to its work, are participating in reviews of their systems for the international exchange of information in tax matters.

Mike Rawstron of Australia, who chairs the Global Forum, was encouraged by the first round of reports. "Jurisdictions are taking the standards seriously," Mr. Rawstron said.

"These reports show that this is not just a numbers game, it is about having in place a legal and regulatory framework which enables an effective exchange of information."

The full report is available online at http://www.oecd.org/dataoecd/1/¼6103056.pdf