Proposed amendment to UK Double Tax Arrangement

16 March 2016

 UK Budget documents issued today include the following statement:

“A Protocol amending the Double Taxation Arrangement between the UK and Jersey has been entered into by an exchange of letters between Her Majesty’s Government and the Government of Jersey.  The amendments remove a potential loophole that may have allowed non-UK resident property developers to avoid income tax or corporation tax in the UK in certain circumstances and are effective from 16 March 2016.  The agreement of this protocol demonstrates the UK’s and Jersey’s joint commitment to working together to counter tax avoidance and evasion.”

An equivalent statement has been made in respect of Guernsey and the Isle of Man.

Jersey’s Minister for External Relations, Senator Sir Philip Bailhache, said “In agreeing to this amendment to the existing Double Taxation Arrangement with the UK we have done so in accord with our longstanding policy of cooperating with the UK to limit the use of Jersey to evade UK tax or engage in abusive tax avoidance.”

The Minister added that “The need for the amendment in respect of a tax measure in the UK Budget, which has general application to non-UK property developers, arose because of the historic wording of the existing Arrangement which was entered into in 1952. 

“The amendment incorporates into the existing arrangement wording from the OECD Model Double Taxation Agreement. We would expect this wording to be in any new DTA that emerges from the renegotiation of our existing DTA, which is due to start soon. It is also consistent with the OECD principles on Base Erosion and Profit Shifting (BEPS) to which we have previously indicated we are generally committed.”

The Exchange of Letters and the Protocol will be placed before the States Assembly for ratification at the earliest possible date.