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STATES OF JERSEY
RATIFICATION OF THE AGREEMENT BETWEEN THE GOVERNMENT OF JERSEY AND THE STATES OF GUERNSEY FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
Lodged au Greffe on 3rd April 2013 by the Chief Minister
STATES GREFFE
2013 Price code: C P.47
PROPOSITION
THE STATES are asked to decide whether they are of opinion
to ratify the Agreement between the Government of Jersey and the States of Guernsey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, as set out in Appendix 1 to the report of the Chief Minister dated 15th March 2013.
CHIEF MINISTER
REPORT
- 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.
- 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.
- 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.
- There are occasions when an approach is made to or received from a jurisdiction that is not an EU, OECD or G20 member, expressing a wish 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, jurisdictions are required to enter into a tax information exchange agreement with any jurisdiction that considers itself to be a relevant partner. The views of the finance industry on the extent to which a tax agreement with the jurisdiction concerned would be supportive of business development are also taken into account when deciding what degree of priority to attach to the negotiations.
- 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.
- The latest position in respect of the programme of negotiating tax agreements in attached as Appendix 2 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.
- 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 ECD members, and 17 of the 19 G20 countries (the 20th member of the G20 is the European Union).
- 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 States of Guernsey
- The Agreement entered into with the States of Guernsey ("the Agreement") is a continuation of the ongoing programme of entering into tax agreements to the international standard. Jersey and Guernsey have had an Arrangement for Double Taxation Relief since 1956. However, this is not to the international standard, and the report on the Global Forum assessment of Jersey included the following recommendation: "Jersey should work with Guernsey and ensure that it has in place an agreement which includes exchange of information provisions in line with the international standard".
- The Agreement is attached as Appendix 1 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.
- The finance industry was consulted, and the signing of the Agreement is seen as a significant step in further strengthening the close political and business relationship with Guernsey.
Procedure for signing and ratifying the Agreement
- The Agreement was signed on 24th January 2013 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.
- 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.
- 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. The necessary Regulations to provide for the inclusion of Guernsey in the Schedule will be presented to the States for adoption immediately following the adoption of the ratification proposition.
Financial and manpower implications
- There are no implications expected for the financial and manpower resources of the States arising from the ratification and implementation of the Agreement.
15th March 2013
APPENDIX 1
APPENDIX 2
STATES OF JERSEY
- TAX INFORMATION EXCHANGE AGREEMENTS (TIEAs)
- TIEAs signed
Countries | Date Signed | Ratified by | Ratified by | Entry into Force |
|
| Jersey | other Party |
|
U.S.A. | Nov. 2002 | May 2006 | Nov. 2002 | 23rd May 2006 |
Netherlands | June 2007 | Feb. 2008 | Dec. 2007 | 1st March 2008 |
Germany | July 2008 | Jan. 2009 | July 2009 | 28th Aug. 2009 |
Sweden | Oct. 2008 | March 2009 | Nov. 2009 | 23rd Dec. 2009 |
Norway | Oct. 2008 | March 2009 | Sep. 2009 | 7th Oct. 2009 |
Iceland | Oct. 2008 | March 2009 | Oct. 2009 | 3rd Dec. 2009 |
Finland | Oct. 2008 | March 2009 | Dec. 2008 | 3rd Aug. 2009 |
Denmark | Oct. 2008 | March 2009 | March 2009 | 6th June 2009 |
Greenland | Oct. 2008 | March 2009 | March 2009 | 6th June 2009 |
Faroes | Oct. 2008 | March 2009 | June 2009 | 21st Aug. 2009 |
U.K. | March 2009 | July 2009 | Nov. 2009 | 27th Nov. 2009 |
France | March 2009 | July 2009 | July 2010 | 11th Oct. 2010 |
Ireland | March 2009 | July 2009 | April 2010 | 5th May 2010 |
Australia | June 2009 | Nov. 2009 | January 2010 | 5th Jan. 2010 |
New Zealand | July 2009 | Nov. 2009 | Sep. 2010 | 27th Oct. 2010 |
Portugal | July 2010 | Sep. 2010 | March 2011 | 9th Nov. 2011 |
People's Republic of China | Oct. 2010 | Jan. 2011 | Oct. 2011 | 10th Nov. 2011 |
Turkey | Nov. 2010 | Feb. 2011 | (1st half 2013) | (1st half 2013) |
Mexico | Nov. 2010 | Feb. 2011 | Feb. 2012 | 22nd March 2012 |
Canada | Jan. 2011 | March 2011 | Dec. 2011 | 19th Dec. 2011 |
Indonesia | April 2011 | July 2011 | (1st half 2013) | (1st half 2013) |
Czech Republic | July 2011 | Nov. 2011 | March 2012 | 14th March 2012 |
South Africa | July 2011 | Nov. 2011 | Jan. 2012 | 29th Feb. 2012 |
Argentina | July 2011 | Sep. 2011 | July 2011 | 9th Dec. 2011 |
India | Nov. 2011 | April 2012 | Jan. 2012 | 8th May 2012 |
Japan | Dec. 2011 | April 2012 | (1st half 2013) | (1st half 2013) |
Poland | Dec. 2011 | April 2012 | August 2012 | 1st Nov. 2012 |
Italy | March 2012 | May 2012 | (1st half 2013) | (1st half 2013) |
Austria | Sep. 2012 | Nov. 2012 | March 2013 | 1st June 2013 |
Latvia | Jan. 2013 | March 2013 | (2nd half 2013) | (2nd half 2013) |
Brazil | Jan. 2013 | March 2013 | (2nd half 2013) | (2nd half 2013) |
Note: dates in brackets are the expected dates based on latest information from the country concerned.
- TIEAs initialled or agreed ready for signing:
- Greece
- Republic of Korea
- Spain
- TIEAs where negotiations are well advanced with a draft agreement exchanged:
- Belgium
- Chile
- Hungary
- Kenya
- Lithuania
- Romania
- Slovakia
- Slovenia
- Switzerland
- Jurisdictions contacted from which there has been a positive response and/or initial action has been taken:
- Bulgaria
- Cyprus
- Saudi Arabia
- Jurisdictions approached but from whom a formal response is awaited:
- G20 Member States:
– Russia
- DOUBLE TAXATION AGREEMENTS (DTAs)
- 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 ratified by Qatar November 2012 in force – 22nd November 2012
- Singapore –
signed October 2012
ratified by Jersey January 2013
- Guernsey – signed January 2013
- Isle of Man – signed January 2013
- DTAs initialled or agreed ready for signing:
- Luxembourg
- DTAs where negotiations have been initiated/draft agreements have been exchanged:
- Bahrain
- Belgium
- Seychelles
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 20th March 2013
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