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 Poland.

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 POLAND

Lodged au Greffe on 9th February 2012 by the Chief Minister

STATES GREFFE

2012   Price code: D  P.14

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,  and  associated  agreements,  between  the  States  of Jersey  and  the Republic of Poland as set out in the Appendices to the Report of the Chief Minister dated 2nd December 2011.

CHIEF MINISTER

REPORT

Background

1. 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.
2. 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.
3. 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.
4. 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 27 Tax Information Exchange Agreements (TIEAs) and 2 Double Taxation Agreements (DTAs) have now been signed, of which 19 TIEAs and 2 DTAs 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.
5. 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 EU and G20 members.  Jersey  has  signed,  initialled  or  is in  the  process  of  negotiation agreements with 23 EU Member States. The remaining 4 jurisdictions have been invited to commence negotiations. Jersey has also now signed, initialled or completed negotiations with 17 of the 19 G20 countries (the other member of the G20 is the European Union).
6. Jersey has been party to the peer review process to assess compliance with international  standards,  and  a  report  on  the  assessment  of  Jersey  was published at the end of October 2011. The review concluded that Jersey's domestic laws provide a satisfactory framework for the exchange of relevant information. The Island fully met the Peer Review Group's standard in 6 of the 9 areas under review. Three areas related to legal implementation were assessed as being in place, but with room for improvement. However, the assessors noted that the apparent gaps they identified had not prevented Jersey from engaging in effective information exchange. Nevertheless, changes are being made to the legislation to ensure that Jersey is fully compliant. The assessors said "overall, this review of Jersey identifies a legal and regulatory framework  for  the  exchange  of  information  which  generally  functions

effectively  to  ensure  that  the  required  information  will  be  available  and accessible.  Jersey's  practices  to-date  have  demonstrated  a  responsive  and cooperative approach.".

7. 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 Poland

8. The Tax Information Exchange Agreement entered into with the Government of the Republic of Poland is a continuation of the ongoing programme of signing TIEAs or DTAs with EU 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 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. an  associated  agreement  for  the  avoidance  of  double  taxation  on individuals in respect of income from employment, directors' fees, the income of artists and sportsmen, pensions and similar remunerations, government service and students, which is consistent with some other jurisdictions (e.g. the Nordic countries);
3. an associated agreement for the avoidance of double taxation with respect to enterprises operating ships or aircraft in international traffic, which is consistent with similar agreements signed previously with some other jurisdictions (e.g. the Nordic countries).

Procedure for signing and ratifying the TIEA and associated Agreements

10. The TIEA and associated Agreements with the Government of the Republic of Poland  were  signed  by  the  Chief  Minister  on  2nd  December  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.
11. The  Agreements  are  now  being  presented  to  the  States  for  ratification, following which they will be published and entered into the official record. The Agreements will 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 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  Poland  and  the  relevant  taxes  will  be presented to the States for adoption in due course.

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 Agreements with the Republic of Poland.

2nd December 2011

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:

• Austria
• Brazil
• Greece
• Italy
• Republic of Korea
• Spain

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

• Chile
• Hungary
• Kenya
• Latvia
• Lithuania
• Slovenia

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

• Romania
• Switzerland

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

EU Member States:

Bulgaria

Cyprus

Slovak Republic

G20 Member States:

Russia

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 ratified by Jersey March 2011 ratified by Estonia December 2011 in force – 13th January 2012

2. DTAs initialled/agreed ready for signing:

• Hong Kong China
• Qatar

3. DTAs where negotiations have been initiated/draft agreements have been exchanged:

• Bahrain
• Belgium
• Luxembourg
• Singapore

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

Adviser – International Affairs 23rd January 2012