21 June 2007
The Dutch State Secretary for Finance, Jan Kees de Jager, reached agreement with the Chief Minister of Jersey, Senator Frank Walker, on Wednesday June 20th regarding the exchange of information relating to tax matters. The Netherlands and Jersey affirmed their wish to deepen economic and trade ties when the State Secretary and the Chief Minister signed two agreements and a Memorandum of Understanding in The Hague, the Netherlands.
State Secretary Jan Kees de Jager welcomed Jersey as a member of the community of nations committed to international cooperation and information exchange on tax matters and recognised Jersey's commitment towards the work of the OECD's Global Forum on Taxation to combat harmful tax competition and to achieve a global level playing field in the areas of transparency and effective exchange of information for tax purposes. The information exchange agreement between the Netherlands and Jersey is based on the OECD’s Model Agreement on the Exchange of Information on Tax Matters.
The importance of exchanging tax information has been increased by the globalisation of the economy. Countries are helping each other combat tax avoidance, fraud, money laundering and terrorist financing.
Both the Netherlands and Jersey have long been active in international efforts in the fight against financial and other crimes including fiscal crimes and each recognises the other’s commitment to comply with international standards on money laundering, terrorist financing and financial regulation.
Further to their agreement, the Netherlands and Jersey will exchange bank and other information on request relating to both criminal and civil tax matters. For criminal tax matters information exchange can apply whether the investigation relates to conduct before or after the coming into force of the agreement. For civil tax matters such exchange can apply only in respect of taxable periods beginning on or after the date of entry into force
As well as the information exchange agreement, the Netherlands and the Jersey signed an agreement on access to mutual agreement procedures relating to transfer pricing and the application of the Dutch participation exemption. The latter securing the application of the Netherlands participation exemption in accordance with the rules as set out in the Netherlands corporate income tax Act. Subject to certain conditions, the Netherlands participation exemption exempts enterprises from tax on income received from participations of 5% or more.
Finally the Netherlands and Jersey agreed to continue negotiations on further measures needed to alleviate undesired tax barriers and other obstacles of a discriminatory nature that may be included in the domestic tax legislation of the parties with the intention in due course to integrate partial results achieved into a double taxation agreement.
Jersey’s Chief Minister, Senator Frank Walker, welcomed the agreements signed and the Memorandum of Understanding. “This commitment to strengthen the economic and trading relationship between the Netherlands and Jersey will be to our mutual benefit”, he said, “and we look forward to negotiations being continued”.
Notes to Editors:
1. For further information, please contact Moya Fenoughty on T: 440450
2. This agreement with the Netherlands is the second agreement for the exchange of tax information that Jersey has signed. The first was with the USA in 2002. Negotiations are proceeding with 14 other countries - Australia, Canada, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, New Zealand, Norway, Spain, Sweden and the UK.
3. These negotiations flow from the political commitment entered into with the OECD in February 2002. That commitment was subject to a level playing field embracing the Island's main competitors of Luxembourg and Switzerland who are OECD members and Hong Kong China and Singapore who are non-OECD. This level playing field is not an immediate prospect and as a result an economic benefits package has been sought when negotiating tax information exchange agreements with OECD member states. This package is expected to be sufficient to offset the 'costs' to be incurred in acting ahead of the creation of the level playing field.
4. The finance industry is consulted on the total package before it is put to the Council of Ministers for approval. The industry was consulted on the agreement with the Netherlands through Jersey Finance Limited in April 2006. There was strong support for the principle of international engagement and it was agreed that signing the agreement with the Netherlands was a reasonable place to start.
5. The agreements are signed by the Chief Minister in accordance with the provisions of Article 18(2) of the States of Jersey Law 2005 and paragraph 1.8.3 of the Strategic Plan 2006-2011 adopted by the States on 28th June 2006. The final decision however rests with the States in that following the signing of the agreements the procedure calls for the making of Regulations providing for the agreements to come into force, which the States are asked to approve, and the full ratification of the agreements by the States following which they are entered into the official record.