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Effective Information Sharing: A Case Study of The Cook Islands and Its Tax Information Exchange Agreements

Tax havens typically provide generous tax incentives under the veil of strict bank secrecy laws, often allowing these entities to commit tax evasion and fraud. The OECD has sought to prevent these harmful tax practices by recommending that states negotiate agreements to allow for tax information exchanges. This paper examines whether the tax information exchange agreements (TIEAs) negotiated by the Cook Islands have delivered on their promise to improve transparency or whether these agreements were merely negotiated with the intention of improving the Cook Islands’ reputation. Document analysis was used to critique 14 of the 16 agreements that the Cook Islands currently has in place. The paper concludes that although TIEAs are a step towards improving transparency, they have failed to fully change the nature of offshore financial activities in the Cook Islands. By signing these agreements, the Cook Islands has improved its international image without appearing to have effectively committed itself to any real obligation to share information. This paper examines the position regarding TIEAs as at 1 July 2011.