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Jersey Completes CbC Reporting Consultation

by Jason Gorringe, Lowtax.net, London
12 August, 2016

Jersey's Government has published the feedback it received on its proposal to introduce a new country-by-country reporting requirement for multinationals.

The consultation was launched on January 22, 2016, and ran until April 22, 2016. The consultation on proposed Regulations was undertaken to inform the next stage in Jersey's commitment to support the actions proposed by the OECD under its base erosion and profit shifting (BEPS) initiative.

The proposals under Action 13 – Transfer Pricing Documentation and Country-By-Country Reporting (CBCR) – of the BEPS project is considered a minimum standard. The Jersey Government said that, providing no major issues were identified in the consultation, draft Regulations would be presented to Ministers for consideration prior to being presented to the States for approval.

The country-by-country report is one element of a new three-tiered standardized approach to transfer pricing documentation consisting of: a master file containing information relevant for all members of the multinational enterprise; a local file containing information about material transactions of the local taxpayer; and the country-by-country report.

In October 2015, the UK published draft Regulations to implement the UK's regime for country-by-country reporting requirements. Jersey's consultation was to seek industry views on aspects of the UK's draft Regulations that it is envisaged would be included in Jersey's Regulations. It is proposed that Jersey would introduce country-by-country reporting requirements for accounting periods which begin on or after January 1, 2017.

In total, the Government received seven responses to the consultation. The respondents included major accounting firms, a large international bank, and one international service provider to the oil and gas industry.

A clear majority of the responses were supportive of the proposals referred to in the consultation document. There were no respondents who disagreed with the Government's position that Jersey should support the actions being undertaken under the base erosion and profit shifting (BEPS) project, and that Jersey's regulations should closely follow the OECD (and UK) model legislation.

A clear majority of respondents highlighted concerns about the potential impact of public CbC reporting. A number of responses argued that Jersey should follow the BEPS minimum standard, which provides for exchange of CbC reporting information between tax authorities. One respondent noted that some jurisdictions, such as the US, have indicated that they will not share information if it is to be made public. Switching to public CbC reporting, it was argued, might therefore inhibit Jersey's ability to share information under its tax information exchange agreements, double tax avoidance agreements, and intergovernmental agreements.

Several responses highlighted the importance of securing alignment of CbC reporting regulations across the Crown Dependencies. In this regard, the Government noted that it recognizes the importance of achieving consistency of CbC reporting implementation for businesses that operate across the Crown Dependencies and that it will continue to coordinate with counterparts in Guernsey and the Isle of Man so as to achieve, to the fullest extent possible, a common approach to CbC reporting implementation.

Last, respondents stressed the importance of effective taxpayer engagement to the overall success of CbC reporting implementation. One respondent recommended that the Jersey Tax Office provide direct assistance to taxpayers in preparing CbC reporting, including through the publication of accompanying guidance on the completion of the CbC reporting templates, and on the interpretation of associated definitions.

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