Ratification of the Agreement on the exchange of information relating to tax matters between the Government of Jersey and the Government of Romania

STATES OF JERSEY

RATIFICATION OF THE AGREEMENT ON THE EXCHANGE OF INFORMATION RELATING TO TAX MATTERS BETWEEN THE GOVERNMENT OF JERSEY AND THE GOVERNMENT OF ROMANIA

Lodged au Greffe on 22nd December 2014 by the Minister for External Relations

STATES GREFFE

2014   Price code: C  P.178

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  Romania  for  the  exchange  of  information  relating  to  tax matters, as set out in Appendix 1 to the report of the Minister for External Relations dated 15th December 2014.

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 over 120 jurisdictions are now members,  agreed  a  peer  review  process  to  assess  compliance  with  the international standard.
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 bilaterally by either a Tax Information Exchange Agreement (TIEA) or a Double Taxation Agreement (DTA). In addition, the standard can be met by becoming party to the  Multilateral  Convention  on  Mutual  Administrative  Assistance  in  Tax Matters. 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 2to this report. A total of 36 TIEAs and 8 DTAs have now been signed, of which 30 TIEAs and 8 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. In addition, there are 15 jurisdictions with whom Jersey does not have a bilateral TIEA or DTA, but who are party to the Multilateral Convention which Jersey joined on 1st June 2014.
6. Jersey 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 27 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". In November 2013, the Global Forum announced the compliance ratings of 50 jurisdictions based on their previous assessments. Jersey was rated as largely compliant, the same rating as the United Kingdom and the USA.

The Agreement with the Government of Romania

8. The Agreement  entered  into  with  the  Government  of  Romania  ("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. Romania is a member of the EU.
9. The Agreement is attached as Appendix 1to 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, 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 signing of the Agreement was undertaken by the Minister for External Relations in London at the Romanian Embassy on 1st December 2014. 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  has authorised the Chief Minister, in concurrence with the Minister for External Relations, 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 amending Regulations to provide for the inclusion in that Schedule of Romania, and the relevant taxes covered, are being lodged "au Greffe" as P.179/2014, on the same date as this Projet.

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.

15th December 2014

APPENDIX 1

APPENDIX 2 STATES OF JERSEY

1. TAX INFORMATION EXCHANGE AGREEMENTS (TIEAs)

1. TIEAs signed (Note: dates in brackets are current best estimates)

2. TIEAs initialled or agreed ready for signing:

• Chile
• Republic of Korea
• Spain

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

• Bulgaria
• Kenya
• Lithuania
• Slovakia

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

• 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 ratified by Luxembourg July 2014 in force – 5th August 2014

2. DTAs initialled or agreed ready for signing:

• Seychelles

3. Jurisdictions where DTA negotiations have been requested/initiated/draft Agreements have been exchanged:

• Bahrain
• Botswana
• Cyprus
• Ghana
• Lesotho
• Liechtenstein
• Malawi
• Mauritius
• Nigeria
• Rwanda
• Saudi Arabia
• Swaziland
• UAE
• Zambia

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P.178/2014

4. Jurisdictions with whom Jersey does not have a bilateral TIEA or DTA, but  who  are  party  to  the  OECD/Council  of  Europe  Multilateral Convention on Mutual Administrative Assistance in Tax Matters (i.e. it is signed  and  in force)  which  provides  for  exchange  of  information  on request on the same basis as the bilateral TIEAs:

• Albania
• Belize
• Colombia
• Costa Rica
• Croatia
• Georgia
• Ghana
• Greece
• Republic of Korea
• Lithuania
• Moldova
• Slovak Republic
• Spain
• Tunisia
• Ukraine

Jersey  became  a  party  to  the  Convention  on  1st  June  2014.  Some jurisdictions  with  whom  TIEA  negotiations  have  been  engaged  may decide not to progress the latter and rely on the Multilateral Convention. One such jurisdiction is Greece.

5. Jurisdictions with whom Jersey has signed a TIEA or DTA who are also party to the Multilateral Convention (i.e. itis signed and in force):

• Argentina
• Australia
• Austria
• Canada
• Czech Republic
• Denmark
• Estonia
• Finland
• France
• Iceland
• India
• Ireland
• Italy
• Japan
• Latvia
• Luxembourg
• Malta
• Mexico
• Netherlands
• New Zealand
• Norway

• Poland
• Romania
• Slovenia
• South Africa
• Sweden
• United Kingdom

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  1st December 2014