Jersey has met the all aspects of the terms of reference (ToR) for the calendar year 2017 (year in review) and no recommendations are made.
Jersey can legally issue four types of rulings within the scope of the transparency framework.
In practice, Jersey has issued 16 past rulings; and for the year in review, Jersey issued one future ruling within the scope of the transparency framework.
No peer input was received in respect of the exchanges of information on rulings received from Jersey.
687. This peer review covers Jersey’s implementation of the BEPS Action 5 transparency framework for the year 2017. The report has four parts, each relating to a key part of the ToR. Each part is discussed in turn. A summary of recommendations is included at the end of this report.
688. Jersey can legally issue the four following types of rulings within the scope of the transparency framework: (i) cross-border unilateral advance pricing arrangements (APAs) and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles; (ii) cross-border rulings giving a unilateral downward adjustment to the taxpayer’s taxable profits in the country giving the ruling; (iii) permanent establishment rulings; and (iv) related party conduit rulings. Rulings are generally issued by the Comptroller or Assistant Comptroller of Taxes.
689. For Jersey, past rulings are any tax rulings within scope that are issued either: (i) on or after 1 January 2015 but before 1 April 2017; or (ii) on or after 1 January 2012 but before 1 January 2015, provided they were still in effect as at 1 January 2015.
690. The process for identifying past rulings was conducted as follows: The Jersey Taxes Office (JTO) performed a multi-staged process in order to identify past rulings. Firstly, searches were performed for relevant words that related to rulings, in the description or name of all documents held in the JTO’s database in order to identify potential rulings in scope, followed by a manual review of the files of each taxpayer identified in this way. Secondly, the files of all companies which were taxed at a rate other than 0% at any time in the previous five years were manually reviewed, as it was considered that companies taxed at the 0% rate were unlikely to have requested a ruling given that Jersey’s standard rate of taxation is 0. This was considered necessary as the JTO’s document storage systems do not permit electronic searches within the documents, in order to address the risk that rulings may have been filed in the database without using these words.
691. All files pertaining to taxpayers with a positive rate of taxation were manually reviewed by the JTO, as it was considered that these taxpayers were most likely to have requested rulings in order to clarify their Jersey tax liability. As a further precaution, both manual and electronic searches of all folders containing correspondence by all three Comptrollers of Taxes and the sole Assistant Comptroller of Taxes during the relevant period from 2012 were undertaken, as these officers were the ones who almost exclusively issued rulings in the period. An instruction was issued to all staff to review any files in-progress for assessment or audit at the time, to identify any paper or electronic rulings associated with the files. A central record of rulings has been maintained from 2015 and this was consulted in addition to the checks above for rulings from 2015 onwards.
692. The potential cases were manually reviewed by a small group of experienced staff members within the JTO. These staff members were instructed to identify whether anything in the files indicated a ruling with an international context may have been issued. The instructions contained a broad and extensive definition for the international context of a ruling. Cases identified to be in scope of Action 5 were escalated to the final review panel which comprised of three senior officers: the Deputy Comptroller (Policy and International), the Assistant Comptroller, and the Director (International Taxes). The officers split the cases to be reviewed, summarised each file and made a recommendation as to whether the ruling was in scope of the transparency framework. This review panel then met to jointly review these summaries and recommendations, and come to a final decision as whether the past ruling was in scope for exchange.
693. In order to identify the potential exchange jurisdictions, the JTO used the “best efforts approach”. This involved reviewing the available information in the taxpayer’s files and those of any known associates, as well as accessing publicly available information regarding a taxpayer’s ownership, activities, and immediate and ultimate parent entities. Jersey was able to identify all potential exchange jurisdictions in all cases.
694. For Jersey, future rulings are any tax rulings within scope that are issued on or after 1 April 2017.
695. The JTO suspended the issuance of rulings made on or after 1 April 2017, until the new policy on the treatment of requests for rulings was finalised. This new policy1 was published on 26 May 2017, setting out new procedures for the request of rulings from the JTO, including a list of information which must accompany the request. Requests for rulings which do not meet the requirements are not processed until the specified information is provided, which includes a list of potentially relevant exchange jurisdictions for the types of rulings issued by Jersey. A panel of at least two senior officers is convened on a monthly basis to identify any requests for rulings that have been issued in the past month that may be relevant for the transparency framework. The new policy therefore requires all information necessary to identify the rulings as being in the scope of the transparency framework and information on all potential exchange jurisdictions.
696. Jersey has a single centralised tax administration of approximately 104 staff. All JTO staff members were trained in the new policy on the treatment of requests for rulings in 2017, and they are periodically reminded of these new procedures. Managers undertaking quality assurance reviews of junior staff members are also required to check that rulings have not been inadvertently granted in the course of normal assessments and audits. Finally, a panel of senior officers is convened on a monthly basis for the review of future rulings granted.
697. Jersey has met all of the ToR for the information gathering process and no recommendations are made.
698. Jersey has the necessary domestic legal basis to exchange information spontaneously. Jersey notes that there are no legal or practical impediments that prevent the spontaneous exchange of information on rulings as contemplated in the Action 5 minimum standard.
699. Jersey is a party to international agreements permitting spontaneous exchange of information, including (i) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011) (“the Convention”) and (ii) arrangements in force with 14 jurisdictions which allow for spontaneous exchange of information.2
700. In order to share the required information with other jurisdictions, Jersey developed a template based on Annex C of the 2015 Action 5 Report (OECD, 2015). Jersey has confirmed that their approach to the completion of the summary section in section 7 of Annex C of the 2015 Action 5 Report conforms with the prescribed instructions to the section. Where relevant, Jersey also utilises the internal FHTP suggested guidance.
701. For past rulings, templates were completed by the Assistant Comptroller of Taxes and submitted to the Competent Authority in December 2017. With respect to future rulings, a senior panel is convened on a monthly basis to review rulings, two members of which are the delegated Competent Authorities for Jersey. When it is determined that an exchange is required to occur under the transparency framework, the relevant template is completed by the Assistant Comptroller of Taxes and passed to any of Jersey’s Competent Authorities. The Competent Authority then reviews the template, and when satisfied, arranges for the template to be exchanged.
702. For the year in review, the timeliness of exchanges is as follows:
|
Past rulings in the scope of the transparency framework |
Number of exchanges transmitted by 31 December 2017 |
Delayed exchanges |
||
|
Number of exchanges not transmitted by 31 December 2017 |
Reasons for the delays |
Any other comments |
||
|
16 |
2 |
A minor error occurred in the identification of immediate and parent companies in the case of PE rulings. |
This error was identified and further exchanges completed on 2 March 2018. This issue has been rectified and therefore not expected to recur. |
|
|
Future rulings in the scope of the transparency framework |
Number of exchanges transmitted within three months of the information becoming available to the competent authority or immediately after legal impediments have been lifted |
Delayed exchanges |
||
|
Number of exchanges transmitted later than three months of the information on rulings becoming available to the competent authority |
Reasons for the delays |
Any other comments |
||
|
1 |
0 |
|||
|
Total |
17 |
2 |
||
|
Follow up requests received for exchange of the ruling |
Number |
Average time to provide response |
Number of requests not answered |
|
0 |
N/A |
N/A |
703. Jersey has the necessary legal framework and administrative process in place for exchanging information on rulings. Jersey has timely exchanged the information on rulings within scope of the transparency framework, with a small number of delays which were swiftly remedied. Jersey has met all of the ToR for the exchange of information process and no recommendations are made.
704. The statistics for the year in review are as follows:
|
Category of ruling |
Number of exchanges |
Jurisdictions exchanged with |
|---|---|---|
|
Rulings related to preferential regimes |
N/A |
N/A |
|
Cross-border unilateral advance pricing arrangements (APAs) and any other cross-border unilateral tax rulings (such as an advance tax ruling) covering transfer pricing or the application of transfer pricing principles |
7 |
Guernsey, Switzerland, United Kingdom |
|
Cross-border rulings providing for a unilateral downward adjustment to the taxpayer’s taxable profits that is not directly reflected in the taxpayer’s financial / commercial accounts |
Included in de minimis |
N/A |
|
Permanent establishment rulings |
7 |
France, Guernsey, Isle of Man, Netherlands, United Kingdom |
|
Related party conduit rulings |
0 |
0 |
|
De minimis rule |
3 |
N/A |
|
IP regimes: total exchanges on taxpayers benefitting from the third category of IP assets, new entrants benefitting from grandfathered IP regimes; and taxpayers making use of the option to treat the nexus ratio as a rebuttable presumption |
N/A |
N/A |
|
Total |
17 |
705. Jersey does not offer an intellectual property regime for which transparency requirements under the Action 5 Report (OECD, 2015) were imposed.
|
Aspect of implementation of the transparency framework that should be improved |
Recommendation for improvement |
|---|---|
|
No recommendations are made. |
OECD (2017), BEPS Action 5 on Harmful Tax Practices – Terms of Reference and Methodology for the Conduct of the Peer Reviews of the Action 5 Transparency Framework, OECD/G20 Base Erosion and Profit Shifting Project, OECD, Paris. www.oecd.org/tax/beps/beps-action-5-harmful-tax-practices-peer-review-transparencyframework.pdf.
OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris. https://doi.org/10.1787/9789264241190-en.
OECD/Council of Europe (2011), The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264115606-en.
← 1. “Taxes Office’s policy on tax rulings”, www.gov.je/SiteCollectionDocuments (accessed 19 November 2018).
← 2. Cyprus, Estonia, Guernsey, Hong Kong, Isle of Man, Luxembourg, Malta, Qatar, Rwanda, Seychelles, Singapore, United Arab Emirates, United Kingdom, United States.
Note by Turkey: The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the “Cyprus issue”.
Note by all the European Union Member States of the OECD and the European Union. The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.