Ratification of the Agreement between the Government of Jersey and the Government of the United Arab Emirates for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

STATES OF JERSEY

RATIFICATION OF THE AGREEMENT BETWEEN THE GOVERNMENT OF JERSEY AND THE GOVERNMENT OF THE UNITED ARAB EMIRATES FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

Lodged au Greffe on 24th June 2016 by the Minister for External Relations

STATES GREFFE

2016  P.67

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 United Arab Emirates for the avoidance of double taxation and the prevention  of  fiscal  evasion  with  respect  to  taxes  on  income,  signed  on 20th April 2016.

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 (TIEAs) to an agreed international standard.
2. 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 priority being given to 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.
3. There are occasions when an Agreement is sought with a jurisdiction that is not an EU, OECD or G20 member. In accordance with its commitment to the OECD tax initiative, Jersey is required to enter into a TIEA with any jurisdiction that can be considered to be a relevant partner. This, together with the views of the finance industry on whether a TIEA with the jurisdiction concerned would be supportive of business development, are factors taken into account when deciding whether or not the negotiation of an Agreement would be justified, and if so, what priority to attach to the negotiations.
4. The International Tax Information Exchange standard can be met through either a Tax Information Exchange Agreement 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 38 TIEAs and 11 DTAs have now been signed, of which 34 TIEAs and 10 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 22 jurisdictions with whom Jersey does not have a bilateral TIEA or DTA, but where information exchange can be provided for through their being a party to the  Multilateral  Convention  on  Mutual  Administrative  Assistance  in  Tax Matters, of which Jersey became a party in June 2014.

The Agreement with the Government of the United Arab Emirates

6. The Agreement entered into with the Government of the United Arab Emirates ("the Agreement") is a continuation of the ongoing programme of entering into Tax Agreements to the international standard with relevant partners.

7. The Agreement is attached asAppendix 1 to this report. The Agreement is in 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.
8. While the United Arab Emirates is not a G20 or OECD member country, it is seen as a relevant partner. The finance industry was consulted, and the signing of the Agreement is seen as a significant step in support of the efforts being made by the finance industry to take advantage of the many trading and investment opportunities to be found in the Gulf region.

Procedure for signing and ratifying the Agreement

9. The Agreement was signed by the Chief Minister 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  to  2011  (P.40/2006) adopted  by  the  States (as amended) on 27th June 2006.
10. 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.
11. The States, on 8th June 2010, adopted the Taxation (Double Taxation) (Jersey) Regulations 2010. The Schedule to these Regulations lists the countries with whom Double Taxation Agreements have been entered into. The necessary Regulations to provide for the inclusion in the Schedule of the Agreement with the Government of the United Arab Emirates will be brought to the States for adoption following the ratification of the Agreement.

Financial and manpower implications

12. There are no anticipated financial or manpower implications for the States arising from the ratification and implementation of the Agreement.

2nd June 2016

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

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

• Bulgaria
• Kenya
• Lithuania
• Slovakia

Note: With reference to 2 and 3 above, for Lithuania and Slovakia the

Multilateral Convention on Mutual Administrative Assistance in Tax Matters has entered into force. Bulgaria and Chile are signatories to the Convention and it should enter into force shortly. Kenya has indicated that it is shortly to sign the Convention. As the Convention provides for the equivalent exchange of information on request with immediate effect, it is expected that all the jurisdictions mentioned will rely on the Convention and will not proceed with the TIEA.

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

• 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

ratified by Jersey October 2015

• Seychelles

signed July 2015

ratified by Jersey October 2015

2. DTAs initialled or agreed ready for signing:

• Mauritius
• United Arab Emirates

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
• Uganda
• 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
• Belize
• Cameroon
• Colombia
• Costa Rica
• Croatia
• Cyprus
• Georgia
• Ghana
• Greece
• Kazakhstan
• Lithuania
• Mauritius
• Moldova
• Nigeria
• Russia
• San Marino
• Saudi Arabia (01-04-16)
• Slovak Republic
• 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
• China (PR)
• Czech Republic
• Denmark
• Estonia
• Finland
• France
• Germany
• Hungary
• Iceland
• India
• Indonesia
• Ireland
• Italy
• Republic of Korea
• Japan
• Latvia
• Luxembourg
• Malta
• Mexico
• Netherlands
• New Zealand
• Norway
• Poland
• Portugal
• Romania
• Seychelles (01-05-16)
• Slovenia
• South Africa
• Spain
• Sweden
• United Kingdom

Enquiries concerning the above should be directed in the first instance to:

Adviser – International Affairs

Chief Minister's Department

[tel. 44(0)1534 440414; e-mail: c.powell@gov.je]

Adviser – International Affairs 22nd February 2016