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

STATES OF JERSEY

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

Lodged au Greffe on 11th August 2015 by the Minister for External Relations

STATES GREFFE

2015   Price code: C  P.93

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 Korea on the exchange of information relating to tax matters, as set out in Appendix 1 to the report of the Chief Minister dated 31st July 2015.

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. Jersey has been assessed by the Global forum and rated as  "largely  compliant"  with  the  international  standards  on  exchange  of information on request, a rating that is shared with Germany, Italy, the UK and the USA.
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 Appendix 2 to this report. A total of 37 TIEAs and 10 DTAs have now been signed, of which 33 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 domestics procedures for the ratification of the Agreements. In addition, since June 2014, Jersey has been party to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, and through this, information can be exchanged with 54 jurisdictions. Some jurisdictions that were negotiating a TIEA  with  Jersey  have  now  decided  to  rely  on  the provisions  of  the Convention.
6. Jersey is an "early adopter" of the Common Reporting Standard on Automatic Exchange  of  Information  (AEOI)  and  will  be  in  a  position  to  exchange information  automatically  for  2016  in  2017.  It  is  expected  that  when jurisdictions  receive  this  information  it will  lead  to  more  requests  for information under the provisions of the TIEAs or the Multilateral Convention. Jersey is a Vice-Chair of a Global Forum Working Group on AEOI.

The Agreement with the Government of the Republic of Korea

7. The Agreement entered into with the Government of the Republic of Korea ("the Agreement") is a continuation of the ongoing programme of entering into  tax  Agreements  to  the  international  standard  with  G20,  OECD  and EU member jurisdictions. Korea is a member of the G20.
8. The Agreement is attached as Appendix 1 to 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.
9. Great  importance is  attached  to  maintaining  a  good  relationship  with the G20 Members,  and  this  Agreement  is  seen  as  a  significant  further strengthening of that relationship. It will also strengthen and enhance the existing business relationship with Korea and will help to facilitate greater market access.

Procedure for signing and ratifying the Agreement

10. The Jersey signing of the Agreement was undertaken by the Minister for External Relations in Jersey on 21st July 2015. 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.
11. 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.
12. 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 Republic of Korea, and the relevant taxes covered, are being separately presented to the States for adoption.

Financial and manpower implications

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

31st July 2015

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
• Spain

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

[Note, however, that Lithuania and Slovakia are party to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, with which Jersey is also joined. As this provides for the equivalent exchange of information on request with immediate effect, it is not expected that they will proceed with the TIEA.]

• Bulgaria
• Kenya
• Lithuania
• Slovakia

4. Jurisdiction approached on which no further action has been taken to date:

• Russia

 _____________________________________________________________________

2. DOUBLE TAXATION AGREEMENTS (DTAs)[1]

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

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• 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

• Rwanda signed June 2015
• Seychelles signed July 2015

2. DTAs initialled or agreed ready for signing:

• Mauritius

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

• Bahrain
• Botswana
• Cyprus
• Ghana
• Lesotho
• Liechtenstein
• Malawi

• Nigeria
• Saudi Arabia
• Swaziland
• UAE
• Zambia

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

• Albania
• Azerbaijan (01-10-2015)
• Belize
• Cameroon (01-10-2015)
• Colombia
• Costa Rica
• Croatia
• Cyprus
• Georgia
• Ghana
• Greece
• Kazakhstan (01-08-2015)
• Lithuania
• Moldova
• Nigeria (01-09-2015)
• Russia
• 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. it is signed and in force):

• Argentina
• Australia
• Austria
• Belgium
• Canada
• Czech Republic
• Denmark
• Estonia
• Finland

• France
• Hungary
• Iceland
• India
• Indonesia
• Ireland
• Italy
• Republic of Korea
• Japan
• Latvia
• Luxembourg
• Malta
• Mexico
• Netherlands
• New Zealand
• Norway
• Poland
• Portugal
• Romania
• Seychelles (01-10-2015)
• 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  29th July 2015