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 South Africa.

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 SOUTH AFRICA

Lodged au Greffe on 11th August 2011 by the Chief Minister

STATES GREFFE

2011   Price code: C  P.139

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 South Africa as set out in the Appendix to the Report of the Chief Minister dated 9th August 2011.

CHIEF MINISTER

REPORT

Agreement to be entered into with the Republic of South Africa for the exchange of information with respect to taxes

1. The States are asked to ratify the signed Agreement to be entered into with the Republic of South Africa for the exchange of information with respect to taxes 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 to an agreed international standard.
3. In  September  2009,  the  Global  Forum  on  Transparency  and  Information Exchange for Tax Purposes, a body of which more than 100 jurisdictions are members,  agreed  a  peer  review  process  to  assess  compliance  with  the international standard. To oversee this process, a Peer Review Group was set up chaired by France, with 4 Vice-Chairs from India, Japan, Singapore and Jersey.
4. 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  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.
5. The latest position in respect of the programme of negotiating tax information exchange agreements is attached as an Appendix to this report. A total of 23 tax  information  exchange  agreements  (TIEAs)  and  2  double  taxation agreements (DTAs) have now been signed, of which 15 TIEAs and one DTA are in force. The delay in bringing agreements into force is due to the length of time taken by the other parties to the agreements to complete their domestic procedures for the ratification of the agreements.
6. As a Vice-Chair of the Global Forum Peer Review Group, Jersey has been determined to lead by example, and has attached particular importance to entering into agreements on tax information exchange with G20 countries. Jersey has now signed, initialled or completed negotiation with 17 of the 19 G20 countries (the other member of the G20 is the European Union).
7. Jersey has been party to the peer review process to assess compliance with international standards, and a report on the assessment of Jersey is due to be published shortly.
8. The  policy  of  negotiating  TIEAs  or  DTAs  is  supported  by  the  finance industry. The preference of government and the industry is for a DTA but the majority of jurisdictions with whom negotiations have been undertaken have

not been prepared to consider a DTA on the grounds that they believe they would derive little if any benefit from such an agreement.

The Agreement with the Republic of South Africa

9. The Tax Information Exchange Agreement entered into with the Republic of South  Africa  is  a  continuation  of  the  ongoing  programme  of  signing  tax agreements with G20 countries.
10. Attached as an Appendix to this report is –

1. the Tax Information Exchange Agreement, which is consistent with agreements  signed  previously  with  other  countries  and  which  the States have ratified. The Agreement provides for the exchange of information on tax matters on request. The Agreement will come into force once both parties to the Agreement have ratified it, and any necessary legislative steps have been taken;
2. the Joint Declaration by Jersey and South Africa recognising each other's commitment to operate financial regulatory systems that meet the  highest  international  standards  in  order  to  combat  money laundering, terrorist financing and other financial and fiscal crimes. The Declaration also refers to the broadening of the political and economic relationship between South Africa and Jersey, signalled by the Agreements signed, as an ongoing process.

Procedure for Signing and Ratifying the TIEA

11. The Agreement with the Republic of South Africa was signed by the Assistant Chief Minister, UK and International Relations, on the 12th July, 2011 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  the  28th  June  2006.  The  Council  of  Ministers  authorised  the Assistant Chief Minister to sign on behalf of the Government of Jersey.
12. The Agreement is now being presented to the States for ratification, following which it will be published and entered into the official record. In due course regulations will be made for the Agreement to enter into force when the domestic procedures of both parties have been completed.
13. 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 are 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  South  Africa  and  the  relevant  taxes  will  be presented  to  the  States  for  adoption  on  due  course  subsequent  to  the ratification of the Agreement.

Financial and Manpower Implications

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 South Africa.

9th August 2011

APPENDIX

STATES OF JERSEY

A.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:

• Brazil

• Greece

• India

• Italy

• Japan

• Poland

• Republic of Korea

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

• Hungary

• Spain

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

• Austria

• Luxembourg

• Hong Kong China

• Slovenia

• Switzerland

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

• EU Member States:

– Bulgaria

– Cyprus

– Latvia

– Lithuania

– Romania

– Slovak Republic

• G20 Member States:

–  Saudi Arabia

B.  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 ratified by Jersey March 2011

2. DTAs where negotiations have commenced:

• 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  Dept;  tel: 44(0)1534 440414; email: c.powell@gov.je

Colin Powell

Adviser – International Affairs

29th July 2011