Ratification of the Agreement on the exchange of information relating to tax matters between the Government of Jersey and the Kingdom of Belgium.

STATES OF JERSEY

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

Lodged au Greffe on 14th April 2014 by the Minister for External Relations

STATES GREFFE

2014   Price code: C  P.52

PROPOSITION

THE STATES are asked to decide whether they are of opinion

to ratify the Agreement between the Government of Jersey and the Kingdom of Belgium on the exchange of information relating to tax matters, as set out in  Appendix 1  to  the  report  of  the  Minister  for  External  Relations  dated 1st April 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 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 2to this report. A total of 35 TIEAs and 8 DTAs have now been signed, of which 28 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. 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 Kingdom of Belgium

8. The Agreement entered into with the Kingdom of Belgium ("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. Belgium  is a  member  of  the  EU,  and  tax  Agreements  now  signed  with EU Member States total 20, with negotiations well advanced with another 7.
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 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 signing of the Agreement was undertaken by the Minister for External Relations  in London  at  the  residence  of  the  Belgian  Ambassador  on 13th March 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, and has further authorized the Chief Minister to delegate the signing to the Minister for Treasury and Resources or the Assistant Chief Minister as appropriate.
12. The Agreement is now being lodged au Greffe for ratification by the States, 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 Belgium, and the relevant taxes covered, are being separately lodged au Greffe for adoption by the States.

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.

1st April 2014

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:

• Chile
• Greece
• Republic of Korea
• Spain

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

• Bulgaria
• Kenya
• Lithuania
• Romania
• 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

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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: None
3. Jurisdictions where DTA negotiations have been requested/initiated/draft Agreements have been exchanged:

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

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 13th March 2014