Tax Information Exchange Agreement with Hong Kong

Information about the publication of Ministerial Decisions

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

An accurate record of “Ministerial Decisions” is vital to effective governance, including:

demonstrating that good governance, and clear lines of accountability and authority, are in place around decisions-making – including the reasons and basis on which a decision is made, and the action required to implement a decision
providing a record of decisions and actions that will be available for examination by States Members, and Panels and Committees of the States Assembly; the public, organisations, and the media; and as a historical record and point of reference for the conduct of public affairs

Ministers are individually accountable to the States Assembly, including for the actions of the departments and agencies which discharge their responsibilities.

The Freedom of Information Law (Jersey) Law 2011 is used as a guide when determining what information is be published. While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.

A decision made 28 March 2012:

Decision Reference: MD-C-2012-0040
Decision Summary Title :	Double Taxation Agreement (DTA) between the Government of Jersey and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China		Date of Decision Summary:	28 March 2012
Decision Summary Author:	Project and Research Officer		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Double Taxation Agreement (DTA) between the Government of Jersey and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China		Date of Written Report:	28 March 2012
Written Report Author:	Adviser – International Affairs		Written Report : Public or Exempt?	Public
Subject: Double Taxation Agreement (DTA) between the Government of Jersey and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China.
Decision(s): The Chief Minister agreed to lodge 'au Greffe' the Report and Proposition inviting the States Assembly to ratify the Double Taxation Agreement between the Government of Jersey and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China.
Reason(s) for Decision: The Double Taxation Agreement signed between the Government of Jersey and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China is the standard OECD agreement between countries to remove double taxation obstacles for the development of economic relations, and so facilitate exchange of goods and services and movements of capital, technology and people. It also delivers the OECD agreed international standard on tax transparency and exchange of information. The signing of the double taxation agreement with the Government of the Hong Kong Special Administrative Region of the People’s Republic of China is a significant step. Jersey is keen to develop its international business relationships, and therefore it is considered in the Island’s best interests that, through the double taxation agreement with the Government of the Hong Kong Special Administrative Region of the People’s Republic of China, Jersey will be further strengthening its international political and business relationships.
Resource Implications: There are no resource implications arising from the ratification and implementation of the double taxation agreement with the Government of the Hong Kong Special Administrative Region of the People’s Republic of China.
Action required: The Greffier of the States is requested to lodge ‘au Greffe’ the Double Taxation Agreement between the Government of Jersey and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China.
Signature:		Position: Senator I J Gorst, Chief Minister
Date Signed:		Date of Decision (If different from Date Signed):

Tax Information Exchange Agreement with Hong Kong

Ratification of the Agreement between the Government of Jersey and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.

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 Hong Kong Special Administrative Region of the People’s Republic of China for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, as set out in the appendix to the report of the Chief Minister dated 28th March 2012.

CHIEF MINISTER

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 some 110 jurisdictions are now members, agreed a peer review process to assess compliance with the international standard. To oversee this process, a peer review group was set up chaired by France with four vice chairs from India, Japan, Jersey and Singapore.

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. There are occasions when an approach is received from a jurisdiction that is not an EU, OECD or G20 member inviting Jersey to enter into the negotiation of a tax information exchange agreement. In accordance with the terms of reference of the peer review process set by the Global Forum Jersey is required to enter into a tax information exchange agreement with any jurisdiction that considers itself to be a relevant partner. This together with the views of the finance industry on whether a tax agreement 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.

5. 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.

6. The latest position in respect of the programme of negotiating tax agreements in attached as an appendix to this report. A total of twenty eight TIEAs and four DTAs have now been signed of which twenty one TIEAs and two 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.

7. As a Vice Chair of the Global Forum Peer Review Group, Jersey has been determined to lead by example, and 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 twenty four of the twenty seven EU member states, thirty two of the thirty four OECD members and seventeen of the nineteen G20 countries(the 20th member of the G20 is the European Union) .

8. 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”

The Agreement with the Government of the Hong Kong Special Administrative Region of the People’s Republic of China

9. The Agreement entered into with the Government of the Hong Kong Special Administrative Region of the People’s Republic of China (“the Agreement”) is a continuation of the ongoing programme of entering into tax agreements to the international standard.

10. The Agreement is attached as an appendix 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.

11. While the Hong Kong Special Administrative Region is not a member of the G20 in its own right it is a dependent territory of a G20 member. In addition Hong Kong is an important financial centre and it is hoped that the signing of the Agreement will prove to be a significant step in the further development of a strong business relationship. It is believed that the Agreement will be of major assistance to the financial services industry, and to business generally, when seeking to take advantage of the many trading and investment opportunities that increasingly are to be found in the Far East, and for which Hong Kong is an important gateway.

Procedure for signing and ratifying the Agreement

12. 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 2006-2011 adopted by the States on the 28th June 2006. The Council of Ministers authorised the Chief Minister to sign on behalf of the Government of Jersey.

13. 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.

14. The States on the 15th June 2010 adopted the Taxation (Double Taxation) (Jersey) Regulations 2010. The Schedule to these Regulations lists the countries with whom Double Tax Agreements have been entered into. As further Agreements are entered into, the Regulations are amended to include the full agreement in the Schedule. The necessary Regulations to provide for the inclusion in the Schedule of the Agreement with the Government of the Hong Kong Special Administrative Region of the People’s Republic of China will be presented to the States for adoption in due course.

Financial and manpower implications

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

27th March 2012