Ratification of the Agreement for the Exchange of Information relating to Tax Matters between the Government of Jersey and the Government of Canada.

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 CANADA

Lodged au Greffe on 24th January 2011 by the Chief Minister

STATES GREFFE

2011   Price code: C  P.8

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 Canada as set out in the Appendix to the Report of the Chief Minister dated 12th January 2011.

CHIEF MINISTER

REPORT

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

1. The States are asked to ratify the signed Agreement to be entered into with Canada for the exchange of information relating to tax matters 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.
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 Appendix 2 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 Canada

8. The tax information exchange agreement entered into with Canada is the 20th such agreement signed and is a continuation of the ongoing programme of signing TIEAs or DTAs with all OECD and G20 member countries. The programme is serving to enhance the Island's international personality and generally is helping to engender a more favourable view of the Island amongst the international community. Canada is a G20 member, and with the signing of this agreement Jersey will have signed with 9, and initialled or completed negotiations with a further 7 of the 19 G20 countries.
9. Attached  as  Appendix 1  to this  report  is 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.
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 Canada is an important step in the further development of the established relationship with Canada and Canadian businesses  that  is seen  by  industry  as  a  continuing  significant  source  of business for the Island.

Procedure for Signing and Ratifying the TIEA

11. The Agreement  with  Canada  was  signed  by  the  Chief  Minister  on  12th January 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  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  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 Canada and the relevant taxes will be presented to the States for adoption in due course, subsequent to the ratification of the Agreement.

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 agreement with Canada.

13th January 2011

APPENDIX 1

APPENDIX 2 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
• Indonesia
• India
• Italy
• Republic of Korea
• South Africa

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

• Czech Republic
• Greece
• Japan
• Poland
• Spain

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

• Hungary
• Luxembourg
• 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 the Adviser –  International  Affairs  in  the  Chief  Minister's  Department; Tel: 44(0)1534 440414; e-mail: c.powell@gov.je  

Adviser – International Affairs 13th January 2011