Ratification of the Agreement for the Exchange of Information Relating to Tax Matters between the Government of Jersey and the Government of Latvia

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 LATVIA

Lodged au Greffe on 11th February 2013 by the Chief Minister

STATES GREFFE

2013   Price code: C  P.23

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 Latvia on the exchange of information relating to tax matters, as set out in the Appendix to the report of the Chief Minister dated 30th January 2013.

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. 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 31 TIEAs and 7 DTAs have now been signed of which 24 TIEAs and 3 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, 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 Government of the Republic of Latvia

8. The Agreement entered into with the Government of the Republic of Latvia ("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. Latvia is a member of the EU and agreements now signed with EU Member States total 14.
9. The Agreement is attached as an Appendix 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. 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 Agreement was undertaken by the Assistant Chief Minister with responsibility for external relations in London in the presence of the  Latvian  Ambassador  on  the  28th  January  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 2006-2011 adopted by the States on the 28th June 2006. The Council of Ministers has authorised the Chief Minister to delegate the Assistant Chief Minister or 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 the 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 Latvia, and the relevant taxes covered, are being separately presented to the States for adoption.

Financial and manpower implications

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

30th January 2013

APPENDIX