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Within the framework of a study on international legal tax regulation of foreign trade it is necessary to discuss at length its one important aspect the system of international agreements designed to regulate the issues of avoiding double taxation and of cooperating in the tax sphere.

The development of information exchange between tax agencies in the RF and their counterpart structures in other countries could result in a considerable reduction of double taxation.

In the RF there exist two main types of international tax agreements: the agreements on avoiding double taxation and the agreements on cooperation and exchange of information on issues relating to compliance with RF tax legislation. The agreements of both types contain provisions regulating the process of exchanging information between the tax agencies of the countries participating in such agreements.

The RF agreements on avoiding double taxation with regard to taxation of immovable property are based on the principle of lex rei sitae22, and those concerning income taxes (tax on profits, tax on incomes of physical persons) - on the principle of lex domicilii23. In this connection Russian legislation stipulates that, if the foreign companies operating in Russia have created their permanent representative offices in its territory, their incomes generated in Russia should be subject to taxation. This procedure creates certain obstacles to tax evasion for the Russian companies registered in offshore zones but in reality continuing to operate in Russia as the representative offices of fictitious offshore companies.

The main accusations addressed to companies registered in offshore zones can be boiled down to the following two:

- unfair tax competition;

- promotion of crime (primarily money laundering).

The measures designed to prevent unfair tax competition are being developed predominantly under the OECDs guidance. The main role in the struggle against money laundering is being played by the FATF24.

The OECD claims that considerable progress has already been achieved in minimizing the channeling of capital and taxes to offshore zones, and special attention had been paid by this organization to developing recommendations concerning the development of tax systems, which can be subdivided into three main groups:

1. The recommendations concerning domestic legislations, in particular with regard to making it easier for tax authorities to gain access to banking information; to residents reporting on their foreign operations, etc.

2. The recommendations concerning international tax agreements. The augmenting of the tax agreements signed by the OECDs member countries by provisions concerning the exchange of information and the interaction between tax agencies;

3. The recommendations concerning international cooperation between tax agencies and banks for purposes of exchanging information.

lex rei sitae - at propertys location.

lex domicilii place of permanent residence (for a physical person); place of registration (for a juridical person).

The FATF (Financial Action Task Force on Money Laundering - FATF) is a special financial commission dealing with the issues of capital laundering an intergovernmental body designed to struggle against money laundering.

Since the summer of 2001 the OECD, within the framework of its activity with regard to tax information exchange, has imposed obligation on offshore jurisdictions to submit information concerning their offshore residents against whom criminal proceedings have been started for tax evasion. From among the countries placed on this black list (published earlier by the OECD), 31 chose to comply with these demands and concluded appropriate agreements with this organization. However, the OECD in its recommendations has pointed to the necessity to conclude such agreements also with those countries that are not offshore zones.

The OECDs 2006 Report demonstrates that its member countries have been continuing to develop international cooperation in order to reduce the tax burden and to promote the mechanisms designed to make information more open and to simplify its exchange for fiscal purposes. Thus, for example, on 28 August 2007 The Ministry of Finance of Belgium published a draft Model Convention to be applied by that country when concluding international agreements on avoiding double taxation.

On 21 February 2007 the government of Ukraine authorized the Ukrainian Ministry of Finance to conclude a new Agreement with the Republic of Cyprus on avoiding double taxation. The new Agreement will replace the one currently in force, which was made between Cyprus and the former USSR as of 29 October 1982. The Agreement is compatible with the OECDs 1977 Model Convention25 on avoiding double taxation.

Quite recently, in April 2008, the OECD approved two new bilateral agreements on information exchange for purposes of taxation: between Guernsey and The Netherlands; and between the Isle of Man and Ireland.

Since the beginning of 2007 the jurisdictions cooperating with the OECD member countries have signed 14 such agreements. The agreement with The Netherlands became the second document of this type signed by Guernsey (the first one having been concluded with the USA in 2002). For the Isle of Man its agreement with Ireland became the tenth concluded in the field of information exchange for purposes of taxation.

As far as the issue of tax information exchange as one of the principal methods for struggling against illegal use of the advantages of offshore zones is concerned, of some interest is the experience of the United States of America.

In accordance with the provisions of the model agreements on avoiding double taxation being concluded by the USA, the parties thereto are obliged to exchange information on taxation, including the taxes not mentioned in an agreements main body. Among other things, competent agencies are empowered, at the request of the other country, to receive and transmit the information being held by banks, nominal shareholders, registration agents, etc. Whenever necessary, the tax agencies of both countries may collect, by appointment of the other party, the taxes due to be paid to it. It is even envisaged that tax audits can be conducted by the authorities of one country in the territory of the other country, however only with the consent of the entities being audited. It should be noted that these agreements are based on the Model Tax Convention Against Double Taxation and Income Tax Evasion ", which was officially adopted in the USA in 1996.

In its turn, this document reproduces the main provisions of the model tax agreement put forth by the OECD.

In addition to the agreements on avoiding double taxation, the USA is also party to separate Tax Exchange Information Agreements (TEIAs). In contrast to the former type agreements, these are more often concluded with offshore zones. In recent months, such agreements were signed with The Caiman Islands, Antigua and Barbuda, The Islands of the Bahamas, the British Virgin Islands, and the Dutch Antilles. It should be noted that these anti-offshore measures undertaken by the USA are fully compatible with the OECDs recommendations.

In the RF, the provisions concerning the exchange of information between tax agencies can be found both in the agreements on avoiding double taxation and in the agreements on cooperation and exchange of information on issues of compliance with RF tax legislation. However, in terms of their legal properties these documents represent general recommendatory agreements and do not fall within the category of sources of law.

The agreements previously concluded by the RF should be adjusted in order to ensure an efficient exchange of information (with the tax agencies of other countries), as well as to make easier the access of tax authorities to banking information. It is of paramount importance that Russia should enter into such agreements with offshore zones, which, in fact, what the OECD is calling for in its recommendations, reports and the annual updates to its 1977 Model Tax Convention.

So far this country has been guided in its exchange of information with the tax agencies of other countries by inadequately elaborated provisions. Their drawbacks are as follows:

http://www.oecd.org/dataoecd/50/49/35363840.pdf - the OECD Model Tax Convention ( 2005 ) and the Draft contents of the 2008 Update to the OECD Model Tax Convention http://www.oecd.org/dataoecd/48/60/40489100.pdf 1. The agreements concluded by the RF26 lack lists of specific taxes for which information should be submitted; there exists only a definition of the term tax legislation as a body of legislative and other legal acts establishing the types of taxes and the procedure for their collection in the territory of a given state, as well as regulating the relations around the arising, changes to and termination of tax liabilities. The agreements of other countries27 contain specific lists of taxes for each of the parties thereto, on which all the necessary information can be presented, which precludes any double interpretation of the term tax legislation, which is not universally applicable to all countries.

2. The agreements signed by the RF do not explain notions such as citizen, person, or information, nor do they specify the boundaries of the territory of each of the agreeing parties. All the aforesaid components are indeed present in the agreements of other countries, which prevents any ambiguity with regard to such terminology.

3. In the agreements concluded by the RF, exchange of information is understood as a rather general list of data to be released, namely: that relating to registration of taxpayers; to the opening, by taxpayers, of accounts with state and commercial banks; to the presence and movement of monies on them; to incomes of taxpayers received in the territories of states; to the amounts of taxes paid; or to any other information relating to taxation. The agreements of other countries contain more specific and subject-oriented lists of information to be exchanged, including the assessment and collection of taxes, recovery of tax claims, or investigation of judicial tax crimes and the crimes associated with tax administration violations28.

4. Besides, the model agreements contain special clauses to the effect that no information should be disclosed that will result in the disclosure of any type of trade, business, industrial, commercial or professional secret or trading process. The state receiving a request has the right to receive and submit, through its competent body, the information being kept by financial institutions or by persons acting inside an institution or on the basis of power of attorney (except information on the existence of a confidential connection between a client and prosecutor, attorney or any other legal representative. Any information received by the parties to an agreement is to be treated as confidential, similarly to the information received under domestic legislation of a state. Information cannot be disclosed to third jurisdictions for any purposes without the consent of the parties to an agreement. In the agreements of the RF this provision is defined only by a general notion of confidentiality, the content of which is not duly explained and is open to different interpretations by the parties to the agreement.

5. In compliance with the recommendations issued by the OECD with regard to the necessity to conclude agreements on exchange of information with offshore states, the Bank of Russia and the Central Bank of Cyprus on 25 December 2007 signed a memorandum on exchange of information. The parties thereto agreed to exchange information in the following fields: licensing; supervision of current activities of the institutions operating beyond state boundaries (including inspections); decision-making concerning the coordination of purchases of shares by supervised parent organizations; struggle against legalization of criminal incomes and the funding of terrorist activities; the state and development of the banking sector; the requirements of legislation in the field of banking supervision.

Also, banks are to submit the information needed for identifying the real owners of the supervised organizations applying for licenses for creating a transboundary institution and/ or conducting transboundary operations with the supervised organizations in the RF or in the Republic of Cyprus, respectively.

Thus, the memorandum imposes no obligations on the CB of Cyprus or on the banking institutions supervised by it to disclose to Russia information concerning any organizations not supervised by it. Within this category fall the international companies used by businessmen for carrying out transactions whose one pur Agreement between the Government of the Russian Federation and the Government of the Republic of Cuba on cooperation and exchange of information on issues of compliance with tax legislation (Havana, 21 January 2004);

Agreement between the Government of the Russian Federation and the Government of the Republic of Bulgaria on cooperation and exchange of information on issues of compliance with tax legislation (Sofia, 2 March 2003) Agreement on the taxation of Savings Income between the United Kingdom and Montserrat (http://www.hmrc.gov.uk/international/montserrat.pdf.

The Tax Exchange Information Agreement (TEIA) between the USA and Antigua and Barbuda (http://translate.google.com/translatehl=ru&sl=en&u=http://www.escapeartist.com/efam32/Barbuda.html&sa=X&oi=t ranslate&resnum=6&ct=result&prev=/search%3Fq%3Dagreement%2Bon%2Bthe%2Bexchange%2Bof%2Binformation%Bfor%2Btax%2Bpurposes%26hl%3Dru%26lr%3D%26newwindow%3D1%26sa%3DG);

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