The continuing vitality of constitutional and comity consideration that may
perhaps lead the US court to refuse to exercise the judicial authority which it
has, but only under United States laws.
However, the United States has shown in recent times its willingness to use its economic
prowess to extract fiscal information and has even offered economic incentives to add to
this. 113This attitude has been reflected in recent legislation known as the ‘Caribbean
Basin Economic Recovery Act.’ The countries that qualify under the act are allowed to
export most products to the United States free of US customs duties for a period of
twelve years. A United States tax deduction is also possible for expenses of attending
business or investment conventions in countries that qualify.
In order to qualify, states must be prepared to sign bilateral executive agreements with
the United States that provides for exchange of such ‘information as is necessary and
appropriate to carry out and enforce the tax laws of the two countries.’
nondisclosure (bank secrecy) laws must be modified.
Id at page 522
Id at page 524
In the case of foreign banks, it is important for there to be a clear classification by the US
court of the type of foreign banking entity. Foreign banks can therefore be classified in
the five following categories:
113 Supra note 20 at page 521 The acts sets strict standard for such agreements, which must extend to civil and criminal matters and to United States, Act country and foreign residents. The agreements must not be limited to information required to be divulged under local law or administrative practice, as is true of some U.S. tax treaties.