Ratification of the Agreement for the exchange of information relating to tax matters between the Government of Jersey and the Government of the Republic of Turkey.

STATES OF JERSEY

RATIFICATION OF THE AGREEMENT FOR THE EXCHANGE OF INFORMATION RELATING TO TAX MATTERS BETWEEN THE GOVERNMENT OF JERSEY AND THE GOVERNMENT OF THE REPUBLIC OF TURKEY

Lodged au Greffe on 23rd December 2010 by the Chief Minister

STATES GREFFE

2010   Price code: C  P.195

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to ratify the Agreement for the exchange of information relating to tax matters between the Government of Jersey and the Government of the Republic of Turkey as set out in the Appendix to the Report of the Chief Minister dated 16th December 2010.

CHIEF MINISTER

REPORT

Agreement to be entered into with the Republic of Turkey for the exchange of information relating to tax matters

1. The States are asked to ratify the signed Agreement to be entered into with the Republic of Turkey for the exchange of information relating to tax matters attached as an appendix to this report.

Background

2. In February 2002 Jersey entered into a political commitment to support the OECD's tax initiative on transparency and information exchange through the negotiation of tax information exchange agreements with each of the OECD Member States.
3. In April 2009, following the G20 Summit in London, the OECD published a progress report on the jurisdictions implementing the internationally agreed tax standards of transparency and information exchange. Jersey was included in  the  list  of  jurisdictions  that  have  substantially  implemented  the internationally agreed tax standard – what has become known as the "white list" – alongside countries such as the United Kingdom, the United States, Jersey, France, Japan etc.
4. Since April 2009 subsequent G20 Summits have encouraged further progress in  agreeing,  implementing  and  abiding  by  the  necessary  international agreements. Since early 2009, over 500 agreements have been signed, where previously only some 45 agreements had been entered into that complied with the current internationally agreed tax standards.
5. To be included on the OECD "white list" in April 2009 Jersey needed to have signed  12  Tax  Information  Exchange  Agreements  (TIEAs)  that  met  the international standards. Since that date further agreements have been signed or have been negotiated to the point where they are ready for signing. The latest position in respect of the overall programme of TIEA negotiations is attached as an Appendix to this report.
6. In  September  2009  the  Global  Forum  on  Transparency  and  Information Exchange  for  Tax  Purposes,  a  body  of  which  over  90  jurisdictions  are members, established a peer review process to assess compliance with the international standards. To oversee this process a Peer Review Group has been set up chaired by France with 4 Vice-Chairs from India, Japan, Singapore and Jersey.
7. The Peer Review process is made up of 2 phases. Phase 1 is concerned with an assessment of the laws and regulations in place, and involves an assessment of whether these are sufficient to meet the international standards. All of the Global Forum members will be assessed in this respect over a 3 year period from March 2010. Phase 2 is concerned with assessing the effectiveness with which the standards are being applied. A number of countries, of which Jersey is one, have volunteered to be assessed for both Phase 1 and Phase 2 within the first 3 year period. An onsite visit took place at the beginning of June with assessors from the Global Forum Secretariat, Denmark and Bermuda, and a

draft report on the assessment was considered by the Peer Review Group at the end of November. The draft report, which remains confidential, will be considered by the Global Forum at its meeting at the end of May 2011, and if adopted it will then be published.

The Agreement with the Republic of Turkey

8. The Tax Information Exchange Agreement entered into with the Republic of Turkey is a continuation of the ongoing programme of signing TIEAs or DTAs with all OECD and G20 member countries.
9. Attached as an Appendix to this report is –

1. The tax information exchange agreement which is consistent with agreements signed previously with other countries.

The  agreement  provides  for  the  exchange  of  information  on  tax matters on request. However that request has to be formulated in writing  in  the  greatest  detail  possible.  There  can  be  no  "fishing expeditions". The agreement will come into force once the parties to the agreement have ratified it, and any necessary legislative steps have been taken;

2. A memorandum of understanding between the competent authorities of the Republic of Turkey and the Government of Jersey which refers to the allocation of costs.

10. In the negotiation of all the TIEAs signed and ratified to-date, the Council of Ministers has had regard for the views of industry which are very supportive of  the  programme  of  TIEA/DTA  negotiations  in  which  the  Council  of Ministers is engaged. The Agreement with Turkey is an important step in the development of an economic relationship with Turkey that is seen by industry as a future source of business opportunities for the Island.

Procedure for Signing and Ratifying the TIEA

11. The Agreement with the Republic of Turkey was signed by the Assistant Chief Minister on 24th November 2010 in accordance with the provisions of Article 18(2) of the States of Jersey Law 2005 and para 1.8.5 of the Strategic Plan 2006 – 2011 adopted by the States on 28th June 2006. The agreement is now being presented to the States for ratification following which it will be published, entered into the official record and Regulations will be made for the  Agreement  to  enter  into  force  when  the  domestic  procedures  of  both parties have been completed.
12. The States on the 29th January 2008 adopted the Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008. The Schedule to these Regulations lists the third countries, and includes the taxes covered by the agreements being entered into. As further agreements are entered into, the Regulations need to be amended to include in the schedule the jurisdiction and the taxes concerned. The necessary Regulations to provide for the inclusion in the  schedule  of  the  Republic  of  Turkey  and  the  relevant  taxes  will  be

presented  to  the  States  for  adoption  in  due  course  subsequent  to  the ratification of the Agreement.

13. The  ongoing  programme  of  negotiating  agreements  with  OECD  and  G20 members is continuing to enhance the Island's international personality, and generally is helping to engender a more favourable view of the Island amongst the international community. Turkey is a G20 Member and Jersey has signed, initialled or completed negotiations with 16 of the 19 G20 countries.
14. There are no implications for the financial or manpower resources of the States arising from the ratification and implementation of the agreement with the Republic of Turkey.

16th December 2010

APPENDIX

STATES OF JERSEY

1. TAX INFORMATION EXCHANGE AGREEMENTS (TIEAs)

1. TIEAs signed

Note: dates in brackets are the expected dates based on latest information from the country concerned.

2. TIEAs initialled/agreed ready for signing:

• Argentina

• Brazil

• Canada

• Indonesia

• India

• Italy

• Republic of Korea

• South Africa

3. TIEAs  where  negotiations  are  well  advanced  with  a  draft  agreement exchanged :

• Czech Republic

• Greece

• Japan

• Spain

4. Jurisdictions contacted from which there has been a positive response and/or initial action has been taken:

• Hungary

• Luxembourg

• Poland

• Russia

• Switzerland

5. Jurisdictions approached but from whom a formal response is awaited:

• OECD Member States;

– Austria

– Slovak Republic

• G20 Member States;

–  Saudi Arabia

2. DOUBLE TAXATION AGREEMENTS( DTAs)

1. DTAs signed:

• Malta –  

signed 25th January 2010 ratified by Malta February 2010 ratified by Jersey June 2010

in force – 19th July 2010

• Estonia -

signed 21st December 2010

2. DTAs where negotiations are well advanced:

• Bahrain

• Belgium

• Qatar

Enquiries concerning the above should be directed in the first instance to Colin Powell, Adviser – International Affairs in the Chief Minister's Department.

Tel: 44(0)1534 440414; E-mail: c.powell@gov.je

Colin Powell Adviser – International Affairs

21st December 2010

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