Jersey among first adopters of measure to stop tax avoidance

Thursday 21 December 2017

Jersey has become one of the earliest adopters of an international measure designed to stop multinationals from shifting profits between countries to avoid paying tax, a practice, known as base erosion profit shifting (BEPS), targeted by the Organisation for Economic Cooperation and Development (OECD).

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 States says 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.

Pictured: Senator Sir Philip Bailhache signing Jersey's ratification to the multilateral convention

 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 enter into effect once two further jurisdictions have ratified the MLI. It 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.

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.