Jersey Finance has been asked by the government to consult its members, including private equity firms, on whether the island should enter into a so-called 'FATCA type' agreement, including a disclosure facility, with the UK government or to explore other options.
The UK first explored the idea of a 'FATCA-style' regime back in August when the UK's International Development Committee (IDC) recommended the introduction of “legislation similar to the relevant section of FATCA”.
The Foreign Account Tax Compliance Act (FATCA) is a piece of US legislation that will require foreign financial institutions, which include non-US private equity firms with US investors, to enter into an agreement with US tax authorities in order to provide periodic reporting of accounts held by US taxpayers. Firms failing to comply face a 30 percent withholding tax on certain payments travelling outside the US.
At the end of last year, the UK Treasury reached out to some of its neighboring offshore jurisdictions, including Jersey and Guernsey, in a bid to create tax exchange agreements that would mirror the US' FATCA.
The consultation period will last until 15 March, and comments can be made either directly to the island’s government or to Jersey Finance, who will present a broader industry view to the government.
“It is our view that considerable work is still required to find a solution that meets the long-term needs of the UK, while at the same time avoiding the very real risks of disproportionate costs in terms of implementation and compliance, as well as any unintended consequences that might unduly harm the international competiveness of Jersey and other centers that form the Crown Dependencies and Overseas Territories,” said in a statement Jersey Finance chief executive Geoff Cook.
The move to bolster tax agreements has been high on the agenda for many countries as the Organisation for Economic Co-operation and Development and the European Union continue their scrutiny of international tax practices.