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Jersey: Double Tax Treaties

International Agreements

It became clear in May 2002 that Jersey, along with its fellow UK dependent territories Guernsey and the Isle of Man, would agree to be part of the EU's information-sharing regime, whereby financial institutions are obliged to pass details of income on investments by nationals of EU member states to their home tax administrations. The EU began information-sharing in 2005, and after some hesitation, Jersey decided to opt for a withholding tax on the Swiss model. This withholding tax became effective from July 1, 2005 at an initial rate of 15%, 20% from July 1, 2008 and 35% from July 1, 2011. Jersey's Comptroller of Income Tax reported in mid-2006 that GBP13 million was collected in withholding tax revenues from bank deposits in the first six months of the directive. For the year 2007, Jersey paying agents retained and passed to the Comptroller a total of GBP34.98 million of withholding tax. This rose slightly to GBP36.62m in 2008. Following the global financial crisis, the total retention tax was GBP11.8 million in 2009 and just over GBP4 million in 2010.

In November, 2002, Jersey signed a Memorandum of Understanding (MoU) with the Gulf state of Bahrain, designed to facilitate cooperation between the two countries on issues such as applications for licences from financial institutions, and the investigation of irregularities.

In October 2003, the Jersey Financial Services Commission announced that Jersey had signed a Memorandum of Understanding (MoU) with the International Organisation of Securities Commissions (IOSCO). The MoU is designed to combat securities and derivatives violations. It obliges signatories to share information about the illegal use of their securities and derivatives markets with each other. In signing up to the MoU, Jersey joins another 24 members. However, according to the JFSC, the island is one of the first offshore finance centres to join. "By signing this memorandum with IOSCO, Jersey reinforces its status as a leading international financial centre and gives international investors greater confidence in the island," JFSC compliance director, John Pallot explained.

In 2006, the JFSC signed Memoranda of Understanding with the regulators in Dubai, Qatar, the Netherlands and the Cayman Islands. These agreements have formalised arrangements for cooperation and information sharing between the regulators and facilitated the enforcement of, and compliance with, the laws of their respective jurisdictions in a bid to help protect investors and depositors and to promote the integrity of financial services markets in the two jurisdictions.

The Jersey Financial Services Commission and the Cyprus Securities and Exchange Commission signed a memorandum of understanding in February 2007 that will further co-operation between the two regulatory bodies.

The JFSC signed a Memorandum of Understanding in April 2007 with two other authorities: the Office of the Superintendent of Financial Institutions Canada (OSFI) and the Irish Financial Services Regulatory Authority (IFSRA).

The JFSC and the British Virgin Islands Financial Services Commission signed a memorandum of understanding in August 2007. This establishes a formal basis for co-operation, including the exchange of information and investigative assistance.

In October 2009, Jersey’s regulator, the Financial Services Commission, signed a statement of cooperation with four United States' financial regulators.

The statement was signed by the JFSC’s Director General, John Harris, and formalizes existing arrangements for cooperation and information sharing between the respective agencies and Jersey.

Jersey's Chief Minister, Terry Le Sueur, said: “This agreement recognizes that the commission and its counterparts in the United States rely on the quality of each other’s regulatory standards. It is the latest in a number of such agreements between the commission and other regulators around the world, and reflects the cooperation that already exists between Jersey and the United States.”

“Jersey signed a Tax Information Exchange Agreement with the US in 2002, and earlier this year I received a letter from the US Treasury, setting out the importance the US Administration attaches to this transparency agreement,” he continued.

"In the letter, Mr Michael Mundaca, from the US Treasury Department, stated that the US Administration believes it is important to distinguish between those jurisdictions that are adopting international standards for information exchange and those that are not.”

“Close co-operation with the US regulators during the current period of change can only benefit an industry which prides itself on meeting international standards,” Le Sueur concluded.

In November 2009, the JFSC Polish Financial Supervision Authority signed a Memorandum of Understanding (MoU) that will further regulatory cooperation between the two bodies.

The MoU establishes an agreed mechanism under which the signatories commit to using their statutory powers of cooperation to assist each other.

John Harris, Director General of the JFSC, said: “I am delighted to sign this Memorandum of Understanding with the Polish Financial Supervision Authority. The global financial crisis has highlighted the need for close cooperation between regulators and this Memorandum will assist in that regard by establishing a formal framework for the exchange of regulatory information and the provision of investigative assistance. Such collaboration should help to protect investors and depositors and promote the integrity of financial services markets in Jersey and Poland.”

In December 2009, JFSC signed a Memorandum of Understanding with Belgian regulator, the Banking, Finance and Insurance Commission, formally enhancing cooperation on regulatory matters.

In June 2010, JFSC signed a Memorandum of Understanding with the Bank Supervision Department of the South African Reserve Bank.

In October 2010, a Memorandum of Understanding was signed by the Jersey Financial Services Commission with the International Association of Insurance Supervisors. The aim was to establish a formal basis for cooperation and information exchange between the Signatory Authorities regarding the supervision of Insurance Companies where cross-border aspects arise. The Memorandum encompasses all issues related to the supervision of Insurance Companies such as licensing, ongoing supervision and winding-up processes. It also includes provisions for requesting and providing information on operations of Insurance Companies supervised by all of the Signatory Authorities.

In July 2011, JFSC signed a Memorandum of Understanding with the French Autorité de Contrôle Prudentiel to establish 'an arrangement for the collection and sharing of information and for carrying out on-site inspections'.

On May 4, 2012, the JFSC signed a Memorandum of Understanding with the German Banking, Insurance and Investment Firms Regulator. It was reported on the JFSC website that: "The MoU provides a framework for the Commission and the BaFin to exchange confidential regulatory information and co-operate with each other regarding the supervision and regulation of entities under their respective authority. The MoU supersedes and updates MoUs that the Commission previously signed in 2000 and 2001 with BaFin’s two predecessor organisations."

John Harris, Director General of the Commission, said, “I am delighted to sign this Memorandum of Understanding, which re-affirms the strong relationship that the Commission has with the BaFin."

 

 

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