Underlining its commitment to transparency and information exchange, the States of Jersey have confirmed its intention to adopt a package of tax measures with the UK, widely referred to as "UK FATCA", which are consistent with those agreed with Guernsey and the Isle of Man. The Cayman Islands have also announced plans to sign up to UK FATCA.
The announcement, made on 20 March 2013 by Jersey's Chief Minister, Senator Ian Gorst, also confirmed that a similar arrangement is currently being negotiated with the US in response to the US Foreign Account Tax Compliance Act (FATCA), the main body of which has already been initialled with the US authorities.
Final negotiations on the mechanism for these arrangements are expected to be concluded with the UK and the US in the short term.
The intergovernmental agreements (IGAs) provide for automatic exchange of information in certain defined tax matters, and will ensure that business in Jersey will continue to operate and compete effectively with that of its global counterparts. It also underscores the positive reputation of Jersey regarding transparency and exchange of information for tax purposes.
There are four components to the proposed package with the UK:
- An agreement similar to the FATCA IGA being negotiated with the US (aside from the jurisdiction specific annexes);
- An alternative reporting arrangement for UK residents who are non-domiciled for tax purposes, which will be included in an annex to the IGA;
- A disclosure facility which will allow investors with assets in Jersey to regularise their past tax affairs prior to information on their accounts being automatically exchanged;
- Possible renegotiation of the current Double Taxation Agreement with the UK.
In making the States of Jersey announcement, Senator Gorst said "We have a centuries-old special relationship with the UK and this package puts beyond doubt our long-held commitment to ensuring that the Island is not used for tax evasion by UK resident tax payers. Our internationally recognised reputation for being transparent and well regulated is a key strength of our financial services sector, and what we have now agreed with the UK will serve to further reinforce this message. It is also in the Island’s long-term interests to keep in step with the global direction of travel towards greater transparency.”
Jersey currently has 31 Tax Information Exchange Agreements in place with its major trading partners, with a number of further TIEA agreements concluded and awaiting signature.
Commenting on the package, Heather Bestwick, Deputy CEO of Jersey Finance, said: "The outline package agreed between Jersey and the UK is largely as expected and as noted by the Chief Minister, Senator Gorst, reflects Jersey’s strong relationship with the UK and the island’s international reputation for high standards of regulation. The extensive consultation process that we ran on behalf of government with our member firms raised a number of points that will be important to capture in the detail of the final agreement and we are encouraged to see that there is reference to jurisdiction specific annexes forming part of the intergovernmental agreement (IGA)."
This announcement represents the most efficient response for stakeholders in Jersey financial services and will now allow the local financial services industry and their advisors to proceed with plans for implementation of FATCA with certainty that Jersey will enter into the IGAs.