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 Austria

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 AUSTRIA

Lodged au Greffe on 17th September 2012 by the Chief Minister

STATES GREFFE

2012   Price code: C  P.85

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  Republic  of  Austria  on  the  exchange  of  information relating to tax matters, as set out in the Appendix to the Report of the Chief Minister dated 11th September 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 favorable view of the Island amongst the international community.
4. 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.
5. The latest position in respect of the programme of negotiating tax Agreements in attached as an Appendix to this Report. A total of 29 TIEAs and 4 DTAs have now been signed, of which 23 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.
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 with the EU, OECD and G20 member jurisdictions. Agreements have been signed, or negotiations have been completed or are well advanced, with 25 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).
7. 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 Republic of Austria

8. The Agreement entered into with the Government of the Republic of Austria ("the Agreement") is a continuation of the ongoing programme of entering into  tax  Agreements  to the  international  standard  with  EU,  OECD  and G20 member jurisdictions. Austria is a member of the EU and the OECD.
9. The Agreement is attached as an Appendix to this report. The Agreement is in line  with  the  OECD  Model  TIEA  and  provides  for  the  exchange  of information on tax matters on request. It is consistent with Agreements signed previously with other jurisdictions and which the States have ratified.
10. Great importance is attached to maintaining a good relationship with the EU Member  States,  and  this  Agreement  is seen  as  a  significant  further strengthening of that relationship which will help to facilitate greater market access.

Procedure for signing and ratifying the Agreement

11. The Jersey signing of the Austrian alternates was undertaken by the Minister for Treasury and Resources in the presence of the Austrian Ambassador on 7th September 2012. The Jersey alternates which were sent previously to Austria for signing by the Austrian Minister of Finance were signed by the Acting Chief Minister. In both cases, the signing was 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  Acting  Chief  Minister  and  the  Minister  for  Treasury  and Resources 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. The Agreement will enter into force when the domestic procedures of both parties have been completed.
13. 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. The necessary Regulations to provide for the inclusion in the Schedule of the Republic of Austria, and the relevant taxes covered, are being presented to the States separately for adoption.

Financial and manpower implications

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

11th September 2012

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:

• 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
• Romania

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

• Cyprus
• Switzerland

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

EU Member States:

Bulgaria

G20 Member States:

Russia

Saudi Arabia

2. DOUBLE TAXATION AGREEMENTS (DTAs)

1. DTAs signed:

• Malta –

signed January 2010

ratified by Malta February 2010 ratified by Jersey June 2010

in force – 19th July 2010

• Estonia –

signed December 2010

ratified by Jersey March 2011 ratified by Estonia December 2011 in force – 30th December 2011

• Hong Kong China – signed February 2012 ratified by Jersey May 2012
• Qatar

signed March 2012

ratified by Jersey May 2012

2. DTAs initialled/agreed ready for signing:

• Singapore

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

• Bahrain
• Belgium
• Luxembourg

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 7th September 2012