Double Taxation Agreement: Ratification of Agreement between Jersey and Republic of Singapore

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A decision made on 30 November 2012:

Decision Reference: MD-C-2012-0117
Decision Summary Title :	Double Taxation Agreement (DTA) between the Government of Jersey and the Government of the Republic of Singapore		Date of Decision Summary:	30th November 2012
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 the Agreement between the Government of Jersey and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.		Date of Written Report:	23rd November 2012
Written Report Author:	Adviser – International Affairs		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Ratification of the Agreement between the Government of Jersey and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.
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 Government of Jersey and the Government of the Republic of Singapore.
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. The Double Taxation Agreement signed between the Government of Jersey and the Government of the State of Singapore 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 Republic of Singapore 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 Republic of Singapore, Jersey will be further strengthening its international political and business relationships.
Resource Implications: There are no resource implications.
Action required: The Greffier of the States is requested to arrange for the Report and Proposition to be lodged ‘au Greffe’ for States debate at the earliest opportunity.
Signature:		Position: Senator I J Gorst, Chief Minister
Date Signed:		Date of Decision (If different from Date Signed):

Double Taxation Agreement: Ratification of Agreement between Jersey and Republic of Singapore

Ratification of the Agreement between the Government of Jersey and the Government of the Republic of Singapore 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 Republic of Singapore 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 23rd November 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 116 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 made to or received from a jurisdiction that is not an EU, OECD or G20 member expressing a wish 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, jurisdictions are required to enter into a tax information exchange agreement with any jurisdiction that considers itself to be a relevant partner. The views of the finance industry on the extent to which a tax agreement with the jurisdiction concerned would be supportive of business development are also taken into account when deciding what degree of 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 nine TIEAs and five DTAs have now been signed of which twenty four 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 domestic 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 five 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 Republic of Singapore

9. The Agreement entered into with the Government of the Republic of Singapore (“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 Singapore 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 Asia .

Procedure for signing and ratifying the Agreement

12. The Agreement was signed by the Assistant Chief Minister with responsibility for External Relations 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 delegate the Assistant 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 Republic of Singapore will be presented to the States for adoption immediately following the adoption of the ratification proposition .

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.

23rd November 2012