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Income Tax

I shall come in a moment to the application of the agreements. Essentially, they are restricted to the income on savings made by individuals. The exchange agreements are reciprocal between the UK and each of Montserrat, the British Virgin Islands, the Netherlands Antilles and Aruba. They provide for the effective taxation of savings income payments made cross-border from paying agents in one territory to individuals resident in the other. Montserrat and Aruba have opted to exchange information on savings income payments immediately. For an initial transitional period, which corresponds to the transitional period of the directive, the British Virgin Islands and the Netherlands Antilles will levy a withholding tax on relevant payments, unless the taxpayer elects for information to be reported to their home state. Those territories applying a withholding tax will pass 75 per cent. of the revenue obtained to the United Kingdom, and they will keep the remaining 25 per cent. in order to cover collection costs. At the end of the transition period, both the British Virgin Islands and the Netherlands Antilles will automatically exchange the information covered by the agreement, although both territories have the option to do so earlier. The information will be passed in accordance with strict rules to ensure the confidentiality of the information supplied. Information cannot be used for any purpose other than direct taxation without the prior written consent of the party that provided it. And only those persons concerned with direct tax matters may have access to the information.