Tax: Exchange of Information Agreement between the Governments of Jersey and Republic of the United Mexican States

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A decision made 21 December 2010 regarding: Tax: Exchange of Information Agreement between the Governments of Jersey and Republic of the United Mexican States.

Decision Reference: MD-C-2010-0100
Decision Summary Title :	Agreement for the exchange of information relating to tax matters between the States of Jersey and the Government of the Republic of the United Mexican States		Date of Decision Summary:	20th December 2010
Decision Summary Author:	Project & Research Officer		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Ratification of the Agreement for the exchange of information relating to tax matters between the States of Jersey and the Government of the Republic of the United Mexican States		Date of Written Report:	20th December 2010
Written Report Author:	Adviser – International Affairs		Written Report : Public or Exempt?	Public
Subject: Agreement for the exchange of information relating to tax matters between the States of Jersey and the Government of the Republic of the United Mexican States.
Decision(s): The Chief Minister, acting on the recommendation of the Council of Ministers, agreed to lodge ‘au Greffe’ a report and proposition seeking ratification of the Agreement for the Exchange of Information Relating to Tax Matters between the Government of the Republic of the United Mexican States and the States of Jersey.
Reason(s) for Decision: The tax information exchange agreement entered into with the Mexican Republic is a continuation of the ongoing programme of signing TIEAs or DTAs with all OECD and G20 member countries. Negotiations with the Government of the Republic of the United Mexican States have produced an agreement on the following: (a) A tax information exchange agreement which is consistent with agreements signed previously with other countries. The agreement provides for the exchange of information on tax matters on request. The agreement will come into force once the parties to the agreement have ratified it, and any necessary legislative steps have been taken;
(b) A joint declaration which recognises that the agreement constitutes a step forward in the global effort to establish an international financial system that is based on transparency and effective exchange of information in tax matters. The joint declaration also recognises Jersey’s “good neighbour” policy, and the Government of the Republic of the United Mexican States has indicated that it will use its best endeavours to ensure that where EU Directives and Regulations concerning the Regulation of Financial Services include provisions referring to the position of third countries, particularly in relation to assessments of equivalence in compliance with EU standards and access to EU markets, Jersey will be treated as fairly and favourably as other third countries. Of particular interest is the statement in the joint declaration that following the entry into force of the TIEA, the Mexican Republic and Jersey will continue the dialogue to examine what measures could be adopted to further enhance and broaden their political and economic relationship including the further examination of undesired tax barriers, and the further extension of the arrangements for information exchange, namely through the negotiation of an agreement for the avoidance of double taxation with respect to certain income of individuals. (c) A memorandum of understanding between the competent authorities of the Mexican Republic and the Government of Jersey which refers to the allocation costs. Most importantly it also states that upon entry into force of the TIEA and in respect of taxes covered by the Agreement, the Mexican authorities shall exclude Jersey from the “list of countries, territories and regions with clearly more favourable tax regimes”, as approved by Ministerial Order No. 150/2004 of 13 February.
Resource Implications: There are no financial or manpower implications.
Action required: The Greffier of the States is requested to lodge ‘au Greffe’ the Agreement for the exchange of information relating to tax matters between the States of Jersey and the Government of the Republic of the United Mexican States, to be taken into consideration.
Signature:		Position: Senator Terry le Sueur, Chief Minister
Date Signed:		Date of Decision (If different from Date Signed):

Tax: Exchange of Information Agreement between the Governments of Jersey and Republic of the United Mexican States

DRAFT REPORT AND PROPOSITION

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

THE UNITED MEXICAN STATES

PROPOSITION

The States are asked to decide whether they are of opinion –

To ratify the Agreement for the exchange of information relating to tax matters between the Government of Jersey and the Government of the United Mexican States as set out in the Appendix to the Report of the Chief Minister dated 16th December 2010.

REPORT

Agreement to be entered into with the United Mexican States for the exchange of information relating to tax matters.

1. The States are asked to ratify the signed Agreement to be entered into with the United Mexican States for the exchange of information relating to tax matters attached as an appendix to this report.

Background

2. In February 2002 Jersey entered into a political commitment to support the OECD’s tax initiative on transparency and information exchange through the negotiation of tax information exchange agreements with each of the OECD Member States.

3. In April 2009, following the G20 Summit in London, the OECD published a progress report on the jurisdictions implementing the internationally agreed tax standards of transparency and information exchange. Jersey was included in the list of jurisdictions that have substantially implemented the internationally agreed tax standard – what has become known as the “white list” – alongside countries such as the United Kingdom, the United States, Jersey, France, Japan etc.

4. Since April 2009 subsequent G20 Summits have encouraged further progress in agreeing, implementing and abiding by the necessary international agreements. Since early 2009 over 500 agreements have been signed where previously only some 45 agreements had been entered into that complied with the current internationally agreed tax standards.

5. To be included on the OECD “white list” in April 2009 Jersey needed to have signed 12 tax information exchange agreements (TIEAs) that met the international standards. Since that date further agreements have been signed or have been negotiated to the point where they are ready for signing. The latest position in respect of the overall programme of TIEA negotiations is attached as an appendix to this report.

6. In September 2009 the Global Forum on Transparency and Information Exchange for Tax Purposes, a body of which over 90 jurisdictions are members, established a peer review process to assess compliance with the international standards. To oversee this process a Peer Review Group has been set up chaired by France with four vice-chairs from India, Japan, Singapore and Jersey.

7. The Peer Review process is made up of two phases. Phase 1 is concerned with an assessment of the laws and regulations in place, and involves an assessment of whether these are sufficient to meet the international standards. All of the Global Forum members will be assessed in this respect over a three year period from March 2010. Phase 2 is concerned with assessing the effectiveness with which the standards are being applied. A number of countries of which Jersey is one have volunteered to be assessed for both Phase 1 and Phase 2 within the first three year period. An onsite visit took place at the beginning of June with assessors from the Global Forum Secretariat, Denmark and Bermuda, and a draft report on the assessment was considered by the Peer Review Group at the end of November. The draft report, which remains confidential, will be considered by the Global Forum at its meeting at the end of May 2011, and if adopted it will then be published.

The Agreement with the United Mexican States

8. The tax information exchange agreement entered into with the United Mexican States is a continuation of the ongoing programme of signing TIEAs or DTAs with all OECD and G20 member countries.

9. Attached as an appendix to this report is –

(a) The tax information exchange agreement which is consistent with agreements signed previously with other countries.

The agreement provides for the exchange of information on tax matters on request. However that request has to be formulated in writing in the greatest detail possible. There can be no “fishing expeditions”. The agreement will come into force once the parties to the agreement have ratified it, and any necessary legislative steps have been taken;

(b) A memorandum of understanding which refers to the allocation of costs.

10. In the negotiation of all the TIEAs signed and ratified to-date the Council of Ministers has had regard for the views of industry which are very supportive of the programme of TIEA/DTA negotiations in which the Council of Ministers is engaged. The Agreement with Turkey is an important step in the development of an economic relationship with Turkey that is seen by industry as a future source of business opportunities for the Island.

Procedure for Signing and Ratifying the TIEA

11. The Agreement with the United Mexican States was signed by the Chief Minister on 12 November 2010 in accordance with the provisions of Article 18(2) of the States of Jersey Law 2005 and para 1.8.5 of the Strategic Plan 2006-2011 adopted by the States on 28 June 2006. The agreement is now being presented to the States for ratification following which it will be published, entered into the official record and Regulations will be made for the Agreement to enter into force when the domestic procedures of both parties have been completed.

12. The States on the 29 January 2008 adopted the Taxation (Exchange of Information with Third Countries) (Regulations) 2008. The Schedule to these Regulations lists the third countries, and includes the taxes covered by the agreements being entered into. As further agreements are entered into, the Regulations need to be amended to include in the schedule the jurisdiction and the taxes concerned. The necessary Regulations to provide for the inclusion in the schedule of the United Mexican States and the relevant taxes will be presented to the States for adoption in due course subsequent to the ratification of the Agreement.

13. The ongoing programme of negotiating agreements with OECD and G20 members is continuing to enhance the Island’s international personality, and generally is helping to engender a more favourable view of the Island amongst the international community. Mexico is a G20 Member and Jersey has signed, initialled or completed negotiations with 16 of the 19 G20 countries.

14. There are no implications for the financial or manpower resources of the States arising from the ratification and implementation of the agreement with the United Mexican States.

16 December, 2010