Ratification of the Agreement between the Government of Jersey and the Swiss Federal Council for the Exchange of Information on Tax Matters.

STATES OF JERSEY

RATIFICATION OF THE AGREEMENT BETWEEN THE GOVERNMENT OF JERSEY AND THE SWISS FEDERAL COUNCIL FOR THE EXCHANGE OF INFORMATION ON TAX MATTERS

Lodged au Greffe on 28th October 2013 by the Minister for External Relations

STATES GREFFE

2013   Price code: C  P.134

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to ratify the Agreement between the Government of Jersey and the Swiss Federal Council for the Exchange of Information on Tax Matters, as set out in Appendix 1 to the report of the Minister for External Relations dated 14th October 2013.

MINISTER FOR EXTERNAL RELATIONS

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 120 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. The international tax information exchange standard can be met through either a  Tax Information  Exchange  Agreement  (TIEA)  or  a  Double  Taxation 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 is attached as Appendix 2 to this report. A total of 32 TIEAs and 8 DTAs have now  been  signed,  of  which  27 TIEAs  and  7 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 26 of the 28 EU member states, 33 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 Swiss Federal Council

8. The Agreement  entered  into  with  the  Swiss  Federal  Council  ("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. Switzerland is a member of the OECD.
9. The Agreement is attached as Appendix 1 to this report. The Agreement isin 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. Jersey and Switzerland have a great deal in common as international finance centres,  and  the  Agreement  will  serve  to strengthen  what  is  already  an important business relationship.

Procedure for signing and ratifying the Agreement

11. The Jersey signing of the Agreement was undertaken by the Chief Minister in London in the presence of the Swiss Ambassador on 16th September 2013. 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 to 2011  adopted  by  the  States  on  27th  June  2006.  The  Council  of Ministers  has  authorized  the  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. 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 Swiss Federal Council, 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.

14th October 2013

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 or agreed ready for signing:

• Belgium
• Chile
• Greece
• Republic of Korea
• Slovenia
• Spain

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

• Bulgaria
• Hungary
• Kenya
• Lithuania
• Romania
• Slovakia

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

–

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

• G20 Member States:

– Russia

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 ratified by Hong Kong June 2013 in force – [July 2013]

• Qatar –

signed March 2012

ratified by Jersey May 2012 ratified by Qatar November 2012 in force – 22nd November 2012

• Singapore –

signed October 2012

ratified by Jersey January 2013 ratified by Singapore May 2013 in force – 2nd May 2013

• Guernsey –

signed January 2013

ratified by Jersey June 2013 ratified by Guernsey May 2013 in force – 9th July 2013

• Isle of Man –

signed January 2013

ratified by Jersey June 2013

ratified by the Isle of Man May 2013 in force – 10th July 2013

• Luxembourg

signed April 2013

ratified by Jersey July 2013

2. DTAs initialled or agreed ready for signing:

–

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

• Bahrain
• Cyprus
• Mauritius
• Saudi Arabia
• Seychelles
• UAE

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 16th October 2013