Ratification of a Double Taxation Agreement between the States of Jersey and the Government of Malta.

STATES OF JERSEY

RATIFICATION OF A DOUBLE TAXATION AGREEMENT BETWEEN THE STATES OF JERSEY AND THE GOVERNMENT OF MALTA

Lodged au Greffe on 20th April 2010 by the Chief Minister

STATES GREFFE

2010   Price code: C  P.50

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to ratify the double taxation agreement between the States of Jersey and the Government of Malta as set out in Appendix 1 to the Report of the Chief Minister dated 14th April 2010.

CHIEF MINISTER

REPORT

Double taxation agreement (DTA) to be entered into with the Government of Malta

1. The States are asked to ratify the signed double taxation agreement to be entered into with the Government of Malta, attached as Appendix 1 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. Since then, the Island has signed 15 tax information exchange agreements; and this action was recognised by the international community. At the time of the G20 Summit held in London on 2nd April 2009 Jersey was included in the OECD list of jurisdictions that have substantially implemented the internationally agreed tax standard – what became known as the "white list", alongside the United Kingdom, the United States, Germany, France, Japan, etc.
3. The G20 has indicated to the Global Forum on Transparency and Exchange of Information for Tax Purposes that it would wish to see countries who met the requirements for "white list" status in April 2009 continuing to negotiate and conclude agreements. The Global Forum has announced that since April 2009 some 300 tax agreements have been concluded, and 19 more countries have met the standards which qualify for "white list" status.
4. All  of  the  15  TIEAs  signed  to-date  meet  the  OECD  tax  standards  on transparency and information exchange, and all but 3 are in force. For those three – France, Ireland and New Zealand – it is expected that the countries concerned will complete their domestic procedures for the ratification of the TIEA in the next few months. TIEAs have been initialled with Mexico, Italy and South Africa, and Jersey is waiting on these jurisdictions to propose a date for  a  signing  ceremony.  TIEA  negotiations  are  also  well-advanced  with Canada, China, India, Japan and Spain. Correspondence has also been entered into with Poland and Portugal and a number of other EU and OECD Member States.  A  full  statement  of  the  current  position  on  TIEA  negotiations  is attached as Appendix 2 to this Report.

Agreement with the Government of Malta

5. The negotiation of a tax information exchange agreement is seen as a first step in the development of a political and economic relationship with the countries concerned, which in due course will lead to the signing of a full or partial double  taxation  agreement.  However,  whenever  the  opportunity  presents itself, the preference has been to negotiate a double taxation agreement from the outset. Some jurisdictions are reluctant to enter into such an agreement with a zero tax jurisdiction because they cannot see any obvious reciprocal benefit. Other countries however, are more open to the idea and one such jurisdiction is Malta.

6. The double taxation agreement signed with the Government of Malta is the standard  OECD  agreement  between  countries  to remove  double  taxation obstacles  for  the  development  of  economic  relations,  and  so  facilitate exchange of goods and services and movements of capital, technology and people.  It  also  delivers  the  OECD  agreed  international  standard  on  tax transparency and exchange of information.
7. The signing of the double taxation agreement with Malta is a significant step. Jersey is keen to develop its business relationships with the European Union, and therefore itis considered in the Island's best interests that, through the double taxation agreement with Malta, Jersey will be further strengthening its political and business relationship with an EU Member State.
8. The finance  industry  fully  supports  the  negotiation  of  double  taxation agreements. Negotiations are underway to sign further such agreements with Belgium and Estonia.

Procedure for signing and ratifying the DTA

9. The procedure adopted in respect of all tax agreements is for industry to be consulted  and  for  the  views  of  industry  to be  taken  into  account  by  the Council of Ministers in deciding whether to support the signing of a tax agreement. As noted above, the finance industry is keen to see double taxation agreements being negotiated and concluded.
10. The Council of Ministers having decided that it is in the Island's best interests for a double taxation agreement to be signed with the Government of Malta both  parties  have  exchanged  signed  agreements  and  commenced  their domestic ratification procedures. The Government of Malta has confirmed that its ratification procedures have been completed.
11. Tax agreements are signed by the Chief Minister or the Deputy Chief Minister 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 2006–2011 adopted by the States on 28th June 2006. Subsequent to the signing by the Chief Minister or the Deputy Chief Minister, tax agreements are presented to the States for ratification,  they  are  published  and  entered  into  the  official  record;  and Regulations are made for the agreements to enter into force when the domestic procedures of both parties have been completed.
12. The necessary Regulations that provide for the bringing into force of the double taxation agreement with the Government of Malta are being presented to the States for adoption subsequent to the ratification of the agreement (see P.51/2010).

Financial and manpower implications

13. There are no implications for the financial or manpower resources of the States arising from the ratification and implementation of the double taxation agreement with the Government of Malta.

14th April 2010

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 ready for signing:

• Indonesia
• Italy
• Mexico
• South Africa

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

• Argentina
• Canada
• People's Republic of China
• India
• Japan
• Spain

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

• Brazil
• Czech Republic
• Republic of Korea
• Luxembourg
• Poland
• Portugal
• Switzerland
• Turkey

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

OECD Member States:

Austria

Greece

Hungary

Slovak Republic

G20 Member States:

Russia

Saudi Arabia

2. DOUBLE TAXATION AGREEMENTS (DTAs)

1. DTAs signed:

• Malta – 25th January 2010

2. DTAs where negotiations are well-advanced:

• Belgium
• Estonia

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).

March 2010

Colin Powell

Adviser – International Affairs