ARTICLE 26

Exchange of Information

Paragraph 1 provides that the competent authorities shall exchange such information as is necessary for carrying out the provisions of the Convention or of the domestic laws concerning taxes covered by the Convention. Paragraph 1 clarifies that the competent authorities may also exchange such information as is necessary to prevent fraud or tax evasion in respect of taxes covered by the Convention. Paragraph 1 requires that information so exchanged will be protected in the same manner as information obtained under domestic laws with respect to secrecy and disclosure. The use of such information is limited to those persons involved in the assessment, collection, or administration of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, taxes covered in the Convention. The Article confirms U.S. policy that information exchanged under these provisions may not be disclosed to any third jurisdiction without permission of the country from which the information is received. Information may be exchanged pursuant to paragraph 1 with respect to persons who are not residents of either Contracting State.

The provisions of paragraph 1 authorize the U.S. competent authority to allow access to information to persons involved in the administration of taxes covered in the Convention. Such persons include legislative bodies involved in the administration of taxes and their agents, such as, for example, the General Accounting Office, when GAO is engaged in a study of the administration of U.S. tax laws pursuant to a directive of Congress. The secrecy requirements of paragraph 1 must, however be met.

Paragraph 2 provides that the State to which a request has been made shall provide information in specified forms to be admissible in judicial proceedings of the requesting State. The specified forms include authenticated copies of unedited original documents, but only to the extent that such forms of information can be obtained under the laws and practices of the State with respect to its own taxes.

Paragraph 2 also obligates a Contracting State to endeavor to obtain information in response to a request as though the tax of the requesting State were being imposed by the requested State. Thus, information must be provided even if it does not relate to a tax liability in the requested State.

Paragraph 3 explains that paragraphs 1 and 2 do not obligate the United States or Barbados to carry out measures contrary to the laws and administrative practice of either State; to supply information not obtainable under the laws or in the normal course of the administration of either State; or to supply information which would disclose trade secrets or qt her information the disclosure of which would be contrary to public policy. Thus, Article 26 allows, but does not obligate, the United States and Barbados to obtain and provide information the disclosure of which would not be available to the requesting State under its laws or administrative practice or that in different circumstances would not be available to the State requested to provide information.

Paragraph 4 specifies the taxes in respect of which information may be exchanged. In the case of Barbados, these are the taxes covered by the Convention under paragraphs l(b) and 2 of Article 2 (Taxes Covered). For the United States, the Article applies to federal income taxes, federal taxes on self-employment income, federal taxes on transfers to avoid income taxes, federal estate and gift taxes and federal excise taxes.

The exchange of information provisions of the Convention complement the executive agreement to exchange tax information entered into with Barbados on November 3, 1984, under the authority of the Caribbean Basin Economic Recovery Act of 1983. That agreement will remain in force after the entry into force of this Convention.