Ratification of the Agreement between the Government of Jersey and the Government of the Republic of Mauritius for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (P.116/2018)

STATES OF JERSEY

RATIFICATION OF THE AGREEMENT BETWEEN THE GOVERNMENT OF JERSEY AND THE GOVERNMENT OF THE REPUBLIC OF MAURITIUS FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

Lodged au Greffe on 19th October 2018 by the Minister for External Relations

STATES GREFFE

2018  P.116

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to ratify the Agreement between the Government of Jersey and the Government of the Republic of Mauritius for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, as set out in Appendix 1 to the attached report of the Minister for External Relations dated 8 October 2018.

MINISTER FOR EXTERNAL RELATIONS

REPORT

Background

1. In February 2002, Jersey entered into a political commitment to support the OECD tax initiative on transparency and information exchange through the negotiation of tax information exchange agreements to an agreed international standard.
2. Successive G20 summits have encouraged jurisdictions to make progress in agreeing, implementing and abiding by the necessary International Agreements for  information  exchange.  In  response,  Jersey  has  maintained  an  active programme of negotiating Agreements with priority being given to EU, OECD and  G20 member  jurisdictions.  This  has  served  to  enhance  the  Island's international  personality,  and  generally  has  helped  to  engender  a  more favourable view of the Island amongst the international community.
3. There are occasions when an approach is made to or received from a jurisdiction that is not an EU, OECD or G20 member expressing a wish to enter into the negotiation of a tax information exchange agreement. In accordance with the terms  of  reference  of  the  peer  review  process  set  by  the  Global  Forum, jurisdictions are required to enter into a tax information exchange agreement with any jurisdiction that considers itself to be a relevant partner. The views of the finance industry on the extent to which a tax agreement with the jurisdiction concerned would be supportive of business development are also taken into account when deciding what degree of priority to attach to the negotiations.
4. The international tax information exchange standard can be met through a bilateral Tax Information Exchange Agreement ("TIEA") or a Double Tax Agreement ("DTA"). The advantage of a DTA is that it offers benefits to individuals  and  the  business  community through the  avoidance  of double taxation or reduced rates of withholding tax, in addition to providing for exchange of information to the international standard.
5. The latest position in respect of the programme of negotiating Tax Agreements is attached as Appendix 2 to this report. A total of 39 TIEAs and 15 DTAs have now been signed, of which 37 TIEAs and 12 DTAs are in force. In addition, there are 49 jurisdictions with whom Jersey does not have a bilateral TIEA or DTA, but where information exchange can occur through their being a party to the  Multilateral  Convention  on  Mutual  Administrative  Assistance  in  Tax Matters, of which Jersey became a party in June 2014.

The Agreement with the Government of the Republic of Mauritius

6. The Double Taxation Agreement entered into with the Government of the Republic of Mauritius ("the Agreement") is a continuation of the ongoing programme of entering into tax agreements to the international standard with relevant partners. Mauritius, like Jersey, is a member of the OECD's Global Forum  on  Transparency  and  Exchange  of  Information  and  the  OECD's Inclusive Framework on Base Erosion and Profit Shifting ("BEPS").

7. The Agreement is attached as Appendix 1 to this report. The Agreement is in line with the OECD Model DTA and provides for the exchange of information on tax matters. It is consistent with agreements signed previously with other jurisdictions, and which the States have ratified.
8. Jersey is fully committed to the OECD's Inclusive Framework on BEPS. Jersey signed the Multilateral Instrument (the "MLI") in June 2017 and was one of the first 3 jurisdictions to ratify the instrument, which is seen as a key element in implementing the OECD's anti-tax avoidance measures. In accordance with this international commitment, Jersey is expected to incorporate the MLI tax treaty provisions into all its Tax Treaties. As this Agreement was concluded before the introduction of the MLI, the Government of Jersey will amend its list of Agreements  covered  under  the  MLI  to  ensure  that  the  Agreement  with Mauritius is amended in line with the treaty-related minimum standards of the OECD's Inclusive Framework on BEPS.
9. Great importance is attached to developing Jersey's relationships with priority Global Markets (high-growth non-EU markets). The Government of Jersey's Global Markets strategy has a strong focus on Commonwealth nations in Sub- Saharan Africa. As Mauritius is both a member of the African Union and a member of the Commonwealth, this Agreement is seen as a significant indicator of success in Jersey's efforts to build stronger commercial and political ties to Africa.

Procedure for signing and ratifying the Agreement

10. The Jersey signing of the Agreement was undertaken by the then Minister for External Relations in London on 3 March 2017. The signing was in accordance with the provisions of Article 18(2) of the States of Jersey Law 2005 and paragraph 1.8.5 of the Strategic Plan 2006 to 2011 (P.40/2006) adopted by the States (as amended) on 27 June 2006.
11. The Agreement is now being presented to the States for ratification, following which it will be published and entered into the official record. The Agreement will enter into force when the domestic procedures of both parties have been completed.
12. The States, on 15 June 2010, adopted the Taxation (Double Taxation) (Jersey) Regulations 2010. The Schedule to these Regulations lists the countries with whom Double Tax Agreements have been entered into. The necessary Order to provide for the inclusion in the Schedule of the Agreement with the Republic of Mauritius will be made subsequent to the ratification.

Financial and manpower implications

13. There are no implications expected for the financial or manpower resources of the States arising from the adoption of this Proposition and the ratification and implementation of the Agreement.

8 October 2018

STATES OF JERSEY

1. TAX INFORMATION EXCHANGE AGREEMENTS ("TIEAs")

1. TIEAs signed (Note: dates in brackets are current best estimates)

+ Note: the delay in ratification arose because, subsequent to the TIEA being signed with Spain, an amendment was required to insert a missing word. This has now been agreed through an exchange of letters with the Spanish authorities, and ratification is proceeding.

2. TIEAs where  negotiations are well advanced with a draft Agreement exchanged:

• Bulgaria
• Kenya
• Lithuania
• Slovakia.

Note:  Bulgaria, Lithuania and Slovakia have signed and entered into force the

Multilateral  Convention  on  Mutual  Administrative  Assistance  in  Tax Matters. Kenya is a signatory to the Convention and it should enter into force shortly. As the Convention provides for the equivalent exchange of information on request with immediate effect, it is expected that all the jurisdictions mentioned will rely on the Convention and will not proceed further with the negotiation of a TIEA.

3. Jurisdiction with which there has been some contact, but on which no further action has been taken to-date:

• Russia.

Note:  Russia has signed and entered into force the Multilateral Convention on

Mutual Administrative Assistance in Tax Matters and therefore does not need a TIEA to make requests for information.

2. DOUBLE TAXATION AGREEMENTS ("DTAs")1

1. DTAs signed:

Malta –  signed January 2010

ratified by Malta February 2010

ratified by Jersey June 2010

in force – 19 July 2010

Estonia –

Hong Kong China –

signed December 2010

ratified by Jersey March 2011 ratified by Estonia December 2011 in force – 30 December 2011

signed February 2012

ratified by Jersey May 2012 ratified by Hong Kong June 2013 in force – July 2013

1 The DTAs listed are those that are to the standard of the OECD Model Convention.

In addition, there is a DTA with the United Kingdom which was entered into in 1952, and a

number of partial DTAs, details of which can be found on the Taxes Office website – http://www.gov.je/TaxesMoney/InternationalTaxAgreements/DoubleTaxation/Pages/PartialDoubleTaxation.aspx A new DTA is in the process of being negotiated with the United Kingdom which will meet

the standard of the OECD Model Convention.

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P.116/2018

Qatar –

Singapore –

Guernsey –

Isle of Man –

signed March 2012

ratified by Jersey May 2012 ratified by Qatar November 2012 in force – 22 November 2012

signed October 2012

ratified by Jersey January 2013 ratified by Singapore May 2013 in force – 2 May 2013

signed January 2013

ratified by Jersey June 2013 ratified by Guernsey May 2013 in force – 9 July 2013

signed January 2013

ratified by Jersey June 2013

ratified by the Isle of Man May 2013 in force – 10 July 2013

Luxembourg –  signed April 2013

ratified by Jersey July 2013 ratified by Luxembourg July 2014 in force – 5 August 2014

Rwanda –

Seychelles –

United Arab Emirates (UAE) –

Cyprus –

Mauritius –

United Kingdom –

Liechtenstein

signed June 2015

ratified by Jersey October 2015 ratified by Rwanda April 2016 in force – 27 June 2016

signed July 2015

ratified by Jersey October 2015 ratified by Seychelles December 2016 in force – 5 January 2017

signed April 2016

ratified by Jersey September 2016 ratified by UAE February 2017 in force – 15 February 2017

signed July 2016

ratified by Cyprus August 2016 ratified by Jersey October 2016 in force – 17 February 2017

signed March 2017

ratified by Mauritius February 2018

signed July 2018 signed August 2018

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P.116/2018

2. DTAs ready for signing:

None.

3. Jurisdictions where DTA negotiations have been requested/initiated/draft agreements have been exchanged:

• Bahrain
• Botswana
• China (People's Republic)
• Ghana
• India
• Kenya
• Lesotho
• Malawi
• Nigeria
• Saudi Arabia
• South Africa
• Swaziland
• Uganda
• Zambia.

4. Jurisdictions with whom Jersey does not have a bilateral TIEA or DTA, but who are party to (i.e. have signed and entered into force) the OECD/ Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which provides for the exchange of information on request, on the same basis as the bilateral TIEAs:

• Albania
• Andorra
• Azerbaijan
• Bahamas
• Bahrain
• Barbados
• Belize
• Bulgaria
• Cameroon
• Colombia
• Cook Islands
• Costa Rica
• Croatia
• Georgia
• Ghana
• Greece
• Grenada
• Guatemala
• Israel

• Kazakhstan
• Kuwait (01-12-18)
• Lebanon
• Liechtenstein
• Lithuania
• Macau
• Malaysia
• Marshall Islands
• Moldova
• Monaco
• Nauru
• Nigeria
• Niue
• Pakistan
• Panama
• Peru
• Russia
• Saint Kitts and Nevis
• Saint Lucia
• Saint Vincent and the Grenadines
• Samoa
• San Marino
• Saudi Arabia
• Senegal
• Slovak Republic
• Tunisia
• Uganda
• Ukraine
• Uruguay
• Vanuatu (01-12-18).

Jersey  became  a  party  to  the  Convention  on  1  June  2014.  Some jurisdictions with whom TIEA negotiations have been engaged may decide not to progress the latter and rely on the Multilateral Convention.

5. Jurisdictions with whom Jersey has signed a TIEA or DTA who are also party to the Multilateral Convention (i.e. it is signed and in force):

• Argentina
• Australia
• Austria
• Belgium
• Brazil
• Canada
• Chile
• China (People's Republic)
• Cyprus
• Czech Republic
• Denmark

• Estonia
• Finland
• France
• Germany
• Hong Kong
• Hungary
• Iceland
• India
• Indonesia
• Ireland
• Italy
• Republic of Korea
• Japan
• Latvia
• Liechtenstein
• Luxembourg
• Malta
• Mauritius
• Mexico
• Netherlands
• New Zealand
• Norway
• Poland
• Portugal
• Romania
• Seychelles
• Singapore
• Slovenia
• South Africa
• Spain
• Sweden
• Switzerland
• Turkey
• United Arab Emirates
• United Kingdom.

Enquiries  concerning  the  above  should  be  directed  in  the  first  instance  to – Mr. C. Powell,  Adviser –  International  Affairs,  Chief  Minister's  Department, telephone: 44(0)1534 440414; e-mail: c.powell@gov.je.

Colin Powell

Adviser – International Affairs  10 October 2018