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Jersey Consults On Reporting CRS Avoidance Arrangements

by Jason Gorringe, Lowtax.net, London
27 September, 2019

The Jersey Government is consulting on the implementation of mandatory disclosure rules for Common Reporting Standard (CRS) Avoidance Arrangements and Opaque Offshore Structures.

The Common Reporting Standard, developed by the OECD, is the new Standard that replaced exchange of information between countries on request, with an automatic obligation to share information on foreign taxpayers to the state that they are tax resident in, to tackle aggressive tax avoidance, evasion, and fraud.

In particular the OECD's most recent work in this area seeks to tackle the use by individuals of residency by investment (RBI) or citizenship by investment (CBI) schemes to avoid their financial account information being shared with their original home state tax authority. These schemes typically entitle individuals to reside or gain citizenship through making an investment in a territory. The work is targeted at schemes in territories considered high risk because they have failed to adhere to international tax transparency standards.

The Jersey Government is seeking feedback from stakeholders on the implementation of its commitments to the EU Code of Conduct Group (Business Taxation) to introduce Mandatory Disclosure Rules (MDRs). The consultation will close on November 1.

The Government said that its preference is to implement MDR based on the OECD model. Revenue Jersey expects, and the OECD Model Rules require, disclosure in two areas, CRS Avoidance Arrangements and Passive Offshore Vehicles in Opaque Structures.

The disclosure is required to be made by an intermediary, which can be either a promoter or a service provider. A promoter is any person who is responsible for the design or marketing of the arrangement or structure, and a service provider is any person engaged to provide assistance or advice on the design, marketing, implementation, or management of a structure or arrangement, and who would be reasonably expected to know that it was a structure or arrangement.

The Government said that it "expects that all tax advisers and entities regulated by the Jersey Financial Services Commission that provide services, should based on the information they could reasonably be expected to hold, be able to identify a structure or arrangement for these purposes."

The Government will produce guidance which will explain the operation of the Model rules, when it is expected that MDR disclosures will be made, and will confirm specific situations and circumstances in which MDR disclosure is not required.

Revenue Jersey expects that disclosures will be made electronically.

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