This practice, known as base erosion profit shifting (BEPS), has been targeted for action by the Organisation for Economic Cooperation and Development (OECD) through a new measure, which Jersey adopted today (20 December 2017).
The Island has become only the third jurisdiction in the world (alongside Austria and the Isle of Man) to have completed its domestic ratification for the OECD’s Multilateral Instrument (MLI), which is the process by which countries will be able to implement the OECD’s anti-avoidance measures. The MLI will enter into effect once two further jurisdictions (five in total) have ratified the MLI.
This underlines Jersey’s strong commitment to international standards for the prevention of tax avoidance and financial crime. Jersey has been part of an ad hoc group of jurisdictions that have worked together on an equal footing to develop the MLI. The Island was also among the first jurisdictions to sign the MLI when the Chief Minister, Senator Ian Gorst, represented Jersey alongside more than 60 jurisdictions at a ceremony at the OECD Headquarters in Paris on 7 June 2017.
After signing Jersey’s ratification, the Minister for External Relations, Senator Sir Philip Bailhache, said: “Our ratification brings the MLI’s entry into force one step closer. I am delighted that Jersey is one of the founding five signatories of the MLI. This is further confirmation of the important role that we continue to play in helping to develop and implement international standards in tax good governance.”
The MLI will modify existing bilateral tax agreements to make them BEPS-compliant, allowing Jersey to strengthen its tax treaty network in a comprehensive manner. Jersey became a BEPS Associate and Member of the BEPS Inclusive Framework at its inaugural meeting on 16 June 2016.
Jersey is fully supportive of the BEPS project and is active in implementing the actions making up the project. As a BEPS Associate, Jersey is able to contribute to the overall development of the project through policy dialogue and exchange of information – participating on an equal footing with OECD, G20 and many other countries and jurisdictions. This demonstrates Jersey’s full commitment towards, and active participation in, the development international standards and will further Jersey’s reputation as a responsible international actor.