Double Taxation Agreement between Governments of Jersey and Estonia: Ratification

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While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.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 20 January 2011 regarding: Double Taxation Agreement between Governments of Jersey and Estonia: Ratification.

Decision Reference: MD-C-2011-0002
Decision Summary Title :	Double Taxation Agreement (DTA) between the States of Jersey and the Government of Estonia		Date of Decision Summary:	13th January 2011
Decision Summary Author:	Project and Research Officer		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Ratification of a Double Taxation Agreement (DTA) between the States of Jersey and the Government of Estonia		Date of Written Report:	13th January 2011
Written Report Author:	Adviser – International Affairs		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Ratification of a Double Taxation Agreement (DTA) between the States of Jersey and the Government of Estonia
Decision(s): The Chief Minister agreed to lodge 'au Greffe' the Report and Proposition inviting the States to ratify the Double Taxation Agreement between the States of Jersey and the Government of Estonia.
Reason(s) for Decision: The negotiation of a tax information exchange agreement is seen as a first step in the development of a political and economic relationship with the countries concerned which in due course will lead to the signing of a full or partial double taxation agreement. However, whenever the opportunity presents itself, the preference has been to negotiate a double taxation agreement from the outset. Some jurisdictions are reluctant to enter into such an agreement with a zero tax jurisdiction because they cannot see any obvious reciprocal benefit. Other countries however are more open to the idea and one such jurisdiction is Estonia. The Double Taxation Agreement signed between Jersey and Estonia 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 Estonia is a significant step. Jersey is keen to develop its business relationships with the European Union, and therefore it is considered in the Island’s best interests that, through the double taxation agreement with Estonia, Jersey will be further strengthening its political and business relationship with an EU Member State.
Resource Implications: There are no resource implications arising from the ratification and implementation of the double taxation agreement with the Government of Estonia.
Action required: The Greffier of the States is requested to lodge ‘au Greffe’ the Double Taxation Agreement between the States of Jersey and the Government of Estonia.
Signature:		Position: Senator T.A. Le Sueur, Chief Minister
Date Signed:		Date of Decision (If different from Date Signed):

Double Taxation Agreement between Governments of Jersey and Estonia: Ratification

DRAFT REPORT AND PROPOSITION

RATIFICATION OF A DOUBLE TAXATION AGREEMENT BETWEEN THE STATES OF JERSEY AND THE GOVERNMENT OF ESTONIA

Proposition

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

To ratify the double taxation agreement between the States of Jersey and the Government of Estonia as set out in the Appendix to the Report of the Chief Minister dated 21st December 2010.

Report

Double taxation agreement (DTA) to be entered into with the Government of Estonia.

1. The States are asked to ratify the signed double taxation agreement to be entered into with the Government of Estonia, 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/DTA 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.

Agreement with the Government of Estonia

8. The negotiation of a tax information exchange agreement is seen as a first step in the development of a political and economic relationship with the countries concerned which in due course will lead to the signing of a full or partial double taxation agreement. However, whenever the opportunity presents itself, the preference has been to negotiate a double taxation agreement from the outset. Some jurisdictions are reluctant to enter into such an agreement with a zero tax jurisdiction because they cannot see any obvious reciprocal benefit. Other countries however are more open to the idea and one such jurisdiction is Estonia.

9. Attached as an appendix to this report is the double taxation agreement signed with the Government of Estonia. This 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.

10. The signing of the double taxation agreement with Estonia is a significant step. Jersey is keen to develop its business relationships with the European Union, and therefore it is considered in the Island’s best interests that, through the double taxation agreement with Estonia, Jersey will be further strengthening its political and business relationship with an EU Member State.

11. The finance industry fully supports the negotiation of double taxation agreements. Negotiations are underway to sign a further such agreement with Belgium.

Procedure for Signing and Ratifying the DTA

12. The Agreement with Estonia was signed by the Deputy Chief Minister in London on 21st December, 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.

13. 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 Estonia and the relevant taxes will be presented to the States for adoption in due course following the ratification of the Agreement.

Financial or Manpower Implications

14. There are no implications for the financial or manpower resources of the States arising from the ratification and implementation of the double taxation agreement with the Government of Estonia.

13 January, 2011