Partner Derek Rhodes considers the implications of the recent G20 summit
Non-cooperative jurisdictions and tax havens were high on the agenda of the recent G20 summit in London, with Gordon Brown calling for a new era of international economic partnership. Jersey is very pleased to be recognised in the top tier of financial centres (White List) by the OECD Progress Report, alongside USA and the UK.
The communiqué section regarding non-cooperative jurisdictions reads as follows:
“To take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information”.
Jersey and Guernsey were identified within those jurisdictions that have ‘substantially implemented the internationally agreed tax standard’. The OECD Progress Report went on to say those financial centres noted as having “committed to but not yet substantially implemented” include Switzerland, Luxembourg and Liechtenstein.
This is great news for Jersey to be recognised as a ‘top tier’ international financial centre. When commenting on the signing of the recent Tax Information Exchange Agreement (TIEA) with the UK, Jersey’s Chief Minister, Senator Terry Le Seuer highlighted the Island’s commitment to the OECD standard of tax information exchange and our willingness to comply with international standards.
Jersey has now signed TIEA’s with 13 nations, the most recent being France and Ireland, having signed the UK agreement in January this year and the USA over a year ago. Whilst the signing of these agreements has raised some questions as to the effect that this will have on Jersey as an International Finance Centre, it seems clear that compliance with OECD’s principles of exchange of information and transparency is vital to ensure that Jersey is recognised by world leaders as a co-operative jurisdiction, and not to find ourselves on international ‘black lists’, and possibly subjected to international sanctions.
It is also important to note that the TIEAs operate under a strict criteria, and it is clearly not the case that information will be provided simply by asking for it under a ‘fishing expedition’. Indeed, to date, several requests have been denied by the Jersey authorities. As far as the UK is concerned, there has been a double tax treaty arrangement for the exchange of information in place for a number of years, and in reality, the TIEA allows no substantial increase in the powers of the HMRC, rather it outlines in more detail the ‘rules of engagement’.
The message from the G20 is very clear; the world is changing and the G20 leaders are determined to ensure that only cooperative jurisdictions will have a place as a legitimate international financial centre, with those failing to meet OECD standards finding themselves on ‘black lists’ and in all likelihood, suffering international sanctions. Jersey is pleased to be considered in the former group, and will continue to work to ensure it maintains its standing as one of the world’s leading international financial centres.