Island among first to join anti-tax avoidance fight

Profit shifting has been targeted by the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting initiative – known as BEPS.

This week Jersey became the third jurisdiction in the world, following Austria and the Isle of Man, to complete domestic ratification for signing up to the Multilateral Instrument – an international initiative which aims to enable anti-tax avoidance measures under BEPS.

To bring the MLI into force, another two countries need to ratify the agreement.

The MLI includes minimum standards to counter tax treaty abuse and to improve dispute resolution mechanisms between jurisdictions.

The move was praised by Pascal Saint-Amans, director of the OECD centre for tax policy and administration.

He said: ‘As the third jurisdiction after Austria and the Isle of Man to ratify the multilateral convention following the signing ceremony in June 2017, Jersey is a forerunner in the implementation of the far-reaching reforms agreed under the BEPS Project.’

A statement released by the Chief Minister’s Department says that the move ‘underlines’ the Island’s 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,’ it says.

After signing the ratification, External Relations Minister Sir Philip Bailhache said the move brought
the introduction of the MLI one step closer.

‘This is further confirmation of the important role that we continue to play in helping to develop and implement international standards in good tax governance.’

The MLI will modify existing bilateral tax agreements – two way treaties – between jurisdictions to make them BEPS-compliant.

Jersey became a BEPS associate and member of the BEPS inclusive framework at its inaugural meeting on 16 June 2016.

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