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

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 STATE OF QATAR

Lodged au Greffe on 30th March 2012 by the Chief Minister

STATES GREFFE

2012   Price code: C  P.35

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to  ratify  the  Agreement  between  the  Government  of  Jersey  and  the Government of the State of Qatar for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, as set out in the Appendix to the Report of the Chief Minister dated 28th March 2012.

CHIEF MINISTER

REPORT

Background

1. In February 2002, Jersey entered into a political commitment to support the OECD 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 some 110 jurisdictions are now 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,  Jersey  and Singapore.
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. There are occasions when an approach is received from a jurisdiction that is not an EU, OECD or G20 member, inviting Jersey to enter into the negotiation of a tax information exchange agreement. In accordance with the terms of reference  of  the  peer  review  process  set  by  the  Global  Forum,  Jersey  is required  to enter  into  a  tax  information  exchange  agreement  with  any jurisdiction that considers itself to be a relevant partner. This, together with the  views  of  the  finance  industry  on  whether  a  tax  agreement  with  the jurisdiction  concerned  would  be  supportive  of  business  development,  are factors taken into account when deciding whether or not the negotiation of an agreement  would  be  justified,  and  if so  what  priority  to attach  to the negotiations.
5. The international tax information exchange standard can be met through either a Tax Information Exchange Agreement (TIEA) or a Double Tax Agreement (DTA). The advantage of a DTA is that it offers benefits to individuals and the business community through the avoidance of double taxation or reduced rates of withholding tax, in addition to providing for exchange of information to the international standard. However, the majority of jurisdictions with whom the Island  has  sought  to negotiate  an  Agreement  have  not  been  prepared  to consider a DTA on the grounds that they would derive little, if any, benefit from such an Agreement because Jersey is a zero-tax jurisdiction.
6. The latest position in respect of the programme of negotiating tax agreements in attached as an Appendix to this Report. A total of 28 TIEAs and 4 DTAs have now been signed, of which 21 TIEAs and 2 DTAs are in force. Almost without exception, 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.

7. 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 with the EU, OECD and G20 member jurisdictions. Agreements have been signed, or negotiations have been completed or are well advanced, with 24 of the 27 EU member states, 32 of the 34 OECD members and 17 of the 19 G20 countries (the 20th member of the G20 is the European Union).
8. Jersey is party to the Peer Review process of assessment of compliance with the  international  standards,  and  a  report  of  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 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  practices  to  date  have  demonstrated  a responsive and co-operative approach".

The Agreement with the Government of the State of Qatar

9. The Agreement entered into with the Government of the State of Qatar ("the Agreement") is a continuation of the ongoing programme of entering into tax agreements to the international standard.
10. The Agreement is attached as an Appendix to this Report. The Agreement isin line with the OECD Model Tax Convention and provides for the avoidance of double taxation to facilitate exchange of goods and services and movement of capital, technology and people. The Agreement also makes provision for information exchange to the agreed international standard.
11. Jersey was approached by the State of Qatar with an invitation to enter into the negotiation of a double tax agreement. While Qatar is not a G20 or OECD member country it is seen as a relevant partner. The finance industry was consulted and the signing of the Agreement is seen as a significant step in support of the efforts being made by the finance industry to take advantage of the many trading and investment opportunities to be found in the Gulf region.

Procedure for signing and ratifying the Agreement

12. The Agreement was signed by the Assistant Chief Minister with responsibility for External Relations 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 Council  of Ministers  authorised  the  Chief  Minister  to delegate  the  Assistant  Chief Minister to sign on behalf of the Government of Jersey.
13. The Agreement is now being presented to the States for ratification, following which it will be published and entered into the official record. The Agreement will enter into force when the domestic procedures of both parties have been completed.

14. The States,  on  15th  June  2010,  adopted  the  Taxation  (Double  Taxation) (Jersey)  Regulations  2010.  The  Schedule  to  these  Regulations  lists  the countries with whom Double Tax Agreements have been entered into. As further Agreements are entered into, the Regulations are amended to include the full Agreement in the Schedule. The necessary Regulations to provide for the inclusion in the Schedule of the Agreement with the Government of the State of Qatar will be presented to the States for adoption in due course.

Financial and manpower implications

15. There are no implications expected for the financial and manpower resources of  the  States  arising  from  the  ratification  and  implementation  of  the Agreement.

28th March 2012

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:

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

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

• Chile
• Hungary
• Kenya
• Latvia
• Lithuania
• Slovakia
• 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

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 – 30th December 2011
• Hong Kong China – signed February 2012
• Qatar

signed March 2012

2. DTAs initialled/agreed ready for signing: –
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 27th March 2012