Taxation
(Implementation) (International Tax Compliance) (Mandatory Disclosure Rules for
CRS Avoidance Arrangements and Opaque Offshore Structures) (Jersey) Regulations
2020
Made 9th September 2020
Coming into
force in accordance with Regulation 20
THE STATES make these Regulations under Article 2
of the Taxation (Implementation) (Jersey) Law 2004[1], and following the decision of the States, taken on the day these
Regulations are made, to adopt P.129/2019 –
part 1
interpretation provisions
1 General definitions
(1) In
these Regulations –
“1961 Law” means the Income Tax (Jersey)
Law 1961[2];
“arrangement” includes an agreement, scheme,
plan or understanding, whether or not legally
enforceable, and includes all the steps and transactions that bring it into
effect;
“authorised person” means the Comptroller or any
person authorised by the Comptroller to perform the functions under
Regulation 18;
“basic information” on a legal person includes,
at a minimum, information about the legal ownership and control structure of
the legal person such as the status and powers of the legal person, its
shareholders or members, and its directors;
“beneficial ownership” or “beneficial owner” is to be construed in a
manner consistent with the latest Financial Action Task Force Recommendations
and includes any natural person who exercises control over a legal person or legal
arrangement and, in the case of –
(a) a trust, means any
settlor, trustee, protector (if any), beneficiary or class of beneficiaries and
any other natural person exercising ultimate effective control over the trust;
(b) a legal arrangement other
than a trust, means persons in equivalent or similar positions to those in
control of a trust;
“business document” means any document –
(a) that relates to the carrying on of a business, trade, profession
or vocation by any person; and
(b) that forms part of any record under any enactment;
“business premises” means premises used in
connection with the carrying on of a business, trade, profession or vocation;
“client”, in respect of an intermediary, means
any person –
(a) who requests an intermediary
to make, or on whose behalf, or for whose benefit the intermediary makes, a CRS
avoidance arrangement or opaque offshore structure available for implementation;
or
(b) who requests an intermediary
to provide, or on whose behalf, or for whose benefit the intermediary provides,
relevant services in respect of a CRS avoidance arrangement or opaque offshore structure;
“client record” means any document kept in
respect of a client which records or could reasonably be expected to record any
information disclosable under Regulation 8;
“Commission” means a Commission of Appeal
constituted under Regulation 16(4);
“Comptroller” means the Comptroller of Revenue
within the meaning of the Revenue
Administration (Jersey) Law 2019[3];
“CRS avoidance
arrangement”
is construed in accordance with Regulation 2;
“CRS Regulations” means the Taxation (Implementation) (International
Tax Compliance) (Common Reporting Standard) (Jersey) Regulations 2015[4];
“CRS” means the Common Reporting Standard for
the Automatic Exchange of Financial Account Information in Tax Matters as
approved by the Council of the Organisation for Economic
Co-operation and Development (“OECD”) on 15th July 2014 and
published on the OECD’s website;
“Financial Action Task Force Recommendations”
means the OECD Financial Action Task Force Recommendations on International
Standards on Combating Money Laundering and the Financing of Terrorism and
Proliferation, adopted on 15th February 2012 and published and updated, from
time to time, on the Financial Action
Task Force website;
“institutional investor” means a legal person or
legal arrangement –
(a) that is regulated in
Jersey or in another jurisdiction as a bank (including a deposit-taking business
regulated under the Banking Business (Jersey)
Law 1991[5]), insurance company, collective investment vehicle or pension fund;
(b) that is a custodial
institution regulated in Jersey under the Financial
Services (Jersey) Law 1998[6] or any such similar institution regulated under the laws of another
jurisdiction;
(c) the shares or interests
of which are regularly traded on an established securities market;
(d) that is a government
entity, central bank, or international or supranational organisation; or
(e) that is wholly-owned by one or more of the foregoing;
“legal arrangement” means an express trust, partnership or arrangement established in
similar form under another jurisdiction;
“legal person” means any entity including an association, a body corporate, company, foundation,
or other relevantly similar entity, but does not include a natural person;
“opaque offshore structure” is construed in accordance with Regulation 3;
“partner jurisdiction” means a jurisdiction –
(a) that
has introduced rules that are substantially similar to
those set out in these Regulations; and
(b) that,
with respect to the particular CRS avoidance arrangement
or opaque offshore structure, has international exchange of information
instruments in effect with all jurisdictions of residence of the reportable taxpayer;
“passive offshore vehicle” is construed in accordance with Regulation 3;
“promoter” is construed in accordance with Regulation 5(1)(a);
“relevant services” means, in respect of a CRS avoidance arrangement or opaque offshore structure,
providing assistance or advice in respect of the
design, marketing, implementation or organisation of that arrangement or structure;
“reportable taxpayer” means, in respect of a CRS avoidance arrangement, any actual or potential
user of that arrangement and, in respect of an opaque offshore structure, a natural
person whose identity as a beneficial owner cannot be accurately determined due
to the opaque offshore structure;
“structure” means an arrangement concerning the direct or indirect ownership or
control of a person or asset.
(2) The Schedule sets out words
and expressions used in these Regulations which are defined in the CRS, and a word
or expression used in these Regulations which is defined in the CRS has the
meaning given in the CRS.
2 Meaning
of “CRS avoidance arrangement”
(1) A “CRS avoidance arrangement”
is any arrangement for which it is reasonable to conclude that it is designed
to circumvent or is marketed as, or has the effect of, circumventing the CRS Regulations
or exploiting an absence of legislative provisions in relation to the CRS,
including through or by –
(a) the
use of an account, product or investment that is not, or purports not to be, a financial
account, but has features that are substantially similar to
those of a financial account;
(b) the
transfer of a financial account, or the monies or financial assets held in a
financial account –
(i) to a financial institution
that is not a reporting financial institution, or
(ii) to
a jurisdiction that does not exchange CRS information with all jurisdictions of
tax residence of a reportable taxpayer;
(c) the
conversion or transfer of a financial account, or the monies or financial assets
held in a financial account, to a financial account that is not a reportable account;
(d) the
conversion of a financial institution –
(i) into a financial institution
that is not a reporting financial institution, or
(ii) into
a financial institution that is resident in a jurisdiction that does not
exchange CRS information with all jurisdictions of tax residence of a reportable
taxpayer;
(e) undermining
or exploiting weaknesses in the due diligence procedures used by financial institutions
to correctly identify –
(i) an account holder or controlling
person, or
(ii) all
the jurisdictions of tax residence of an account holder or controlling person;
(f) allowing,
or purporting to allow –
(i) an entity to qualify as an active
NFE,
(ii) an
investment to be made through an entity without triggering a reporting
obligation under the CRS Regulations, or
(iii) a person to avoid being
treated as a controlling person; or
(g) classifying
a payment made for the benefit of an account holder or controlling person as a payment
that is not reportable under the CRS Regulations.
(2) For the purposes of this Regulation,
an arrangement is not considered to have the effect of circumventing the CRS Regulations
solely because it results in non-reporting under those Regulations, provided
that it is reasonable to conclude that such non-reporting does not undermine the
policy intent of the CRS Regulations.
3 Meaning
of “opaque offshore structure”
(1) An “opaque offshore structure”
means a passive offshore vehicle that is held through an opaque structure.
(2) Subject to paragraph (3),
a “passive offshore vehicle” means a legal person or legal arrangement that
does not carry on a substantive economic activity supported by adequate staff,
equipment, assets and premises in the jurisdiction where it is established or
is tax resident.
(3) A passive offshore vehicle
does not include a legal person or legal arrangement –
(a) that is an institutional
investor or is wholly-owned by one or more institutional
investors; or
(b) where all beneficial owners
of that legal person or legal arrangement are only resident for tax purposes in
the jurisdiction of incorporation, residence, management, control and establishment (as applicable) of the legal person or legal arrangement.
(4) An “opaque structure” is a structure for
which it is reasonable to conclude that it –
(a) is designed to have;
(b) is marketed as having; or
(c) has the effect of
allowing,
a natural person to be a beneficial owner of a passive offshore vehicle
while acting in a way described in paragraph (5).
(5) Acting in a way mentioned in paragraph (4)
means not allowing the accurate determination of the natural person’s beneficial
ownership, or creating the appearance that that person is not a beneficial owner
including by or through –
(a) the use of nominee
shareholders with undisclosed nominators;
(b) the use of means of
indirect control beyond formal ownership;
(c) the use of arrangements
that provide a reportable taxpayer with access to assets held by, or income
derived from, the structure without being identified as a beneficial owner of
such structure;
(d) the use of legal persons
in a jurisdiction where there is –
(i) no requirement to keep,
or mechanism to obtain, basic information and beneficial owner information, as
defined in the latest Financial Action Task Force Recommendations, on such legal
persons that is accurate and up to date,
(ii) no obligation on
shareholders or members to disclose the names of persons on whose behalf shares
are held, or
(iii) no obligation on, or
mechanism for, shareholders or members of such legal persons to notify the legal
person of any changes in ownership or control;
(e) the use of legal arrangements
organised under the laws of a jurisdiction that do not require the trustees (or
in case of a legal arrangement other than a trust, the persons in equivalent or
similar positions as the trustee of a trust) to hold, or be able to obtain,
adequate, accurate and current beneficial ownership information regarding the legal
arrangement.
4 Power
to issue guidance on determining “reasonable to conclude”
(1) For the purposes of
Regulations 2 and 3, the Comptroller may issue guidance on how to
determine the expression “reasonable to conclude”.
(2) Regard must be had to any
guidance issued under this Regulation.
(3) The Comptroller may issue revised
guidance, from time to time, and a reference to guidance in this Regulation includes
a reference to revised guidance.
(4) Guidance issued under this
Regulation must be published by the Comptroller in a manner which the
Comptroller considers will bring it to the attention of those most likely to be
affected by it.
5 Meaning of
“intermediary”
(1) An “intermediary” means –
(a) any person responsible for the design or marketing of a CRS avoidance arrangement or opaque offshore structure
(“promoter”); and
(b) any
person that provides relevant services in respect of a CRS avoidance
arrangement or opaque offshore structure in circumstances where the person
providing such services could reasonably be expected to know that the arrangement
or structure is a CRS avoidance arrangement or an opaque offshore structure
(“service provider”).
(2) The expression “reasonably be
expected to know”, mentioned in paragraph (1)(b), must be determined by
reference to the service provider’s actual knowledge based on readily available
information and the degree of expertise and understanding required to provide
the relevant services.
part 2
Requirement to disclose crs avoidance
arrangements and opaque offshore structures
6 Obligation on
intermediary to disclose
Any person that is an intermediary with respect to a CRS avoidance arrangement
or opaque offshore structure, must disclose that arrangement or structure to
the Comptroller if that person –
(a) makes that CRS avoidance
arrangement or opaque offshore structure available for implementation, or
provides relevant services in respect of that CRS avoidance arrangement or opaque
offshore structure, through an office of that intermediary located in Jersey;
(b) is resident or has their
place of management and control in Jersey; or
(c) is incorporated or
established under Jersey law.
7 When information is
required to be disclosed
The disclosure
required under Regulation 6 must be made not later than 30 days after
the intermediary –
(a) makes the CRS avoidance arrangement or
opaque offshore structure available for implementation; or
(b) supplies relevant services in
respect of the CRS avoidance arrangement or opaque offshore structure.
8 Information required to
be disclosed by intermediary
(1) Subject to Regulation 9,
the disclosure required under Regulation 6 must include the following
information to the extent that that information is within the knowledge,
possession or control of the intermediary –
(a) the
name, address, jurisdiction and tax identification number of tax residence of
the following –
(i) the intermediary making the
disclosure,
(ii) any client of that intermediary
in respect of that arrangement or structure (separately identifying any client
that is a reportable taxpayer, including the date of birth of such a person),
(iii) any actual user of a CRS avoidance
arrangement or beneficial owner of an opaque offshore structure,
(iv) any person that is an intermediary
with respect to that arrangement or structure (other than the person making the
disclosure);
(b) details of that CRS avoidance
arrangement or opaque offshore structure including –
(i) in respect of a CRS avoidance
arrangement, a factual description of those features of the arrangement that
are designed to circumvent, marketed as having, or have the effect of,
circumventing the CRS Regulations, and
(ii) in respect of an opaque offshore
structure, a factual description of those features that have the effect of not
allowing the accurate determination of the reportable taxpayer’s beneficial ownership
or creating the appearance that the reportable taxpayer is not a beneficial owner
of the passive offshore vehicle; and
(c) the jurisdiction where
the CRS avoidance arrangement or opaque offshore structure has been made
available for implementation.
(2) The information that is required to be
disclosed under paragraph (1) may be in such form as the Comptroller may
prescribe.
9 Exemption from Regulation 8 disclosure requirements
(1) An intermediary is not subject to the requirement
to disclose the information set out in Regulation 8 if that information is
in respect of any information or document which a person would, in any court
proceedings, be entitled to refuse to disclose or produce on the grounds of
legal professional privilege –
(a) except if that intermediary
is a lawyer, the name and address of his or her client; and
(b) only to the extent the
disclosure would reveal confidential information held by an advocate, solicitor
or other admitted legal representative with respect to a client, as defined in
the commentary to Article 26 of the OECD Model Tax Convention (as
published on the OECD website).
(2) An intermediary that is exempted by
paragraph (1) from the disclosure requirements set out in Regulation 8,
must provide written notice to the client to fulfil the obligations set out in Regulations 6,
7 and 8.
10 No obligation on intermediary to
disclose to the extent information has already been disclosed
An intermediary is not required to disclose any information set out
in Regulation 8 to the extent that the intermediary holds documentation
demonstrating that –
(a) such information was
previously disclosed to the Comptroller;
(b) the information relates
to relevant services supplied, or a CRS avoidance arrangement or opaque offshore
structure made available for implementation, through an office maintained by
that intermediary in a partner jurisdiction and such information has been
disclosed to the tax authority of that partner jurisdiction; or
(c) the intermediary is
required to disclose such information under Regulation 6(c) and such information
has been disclosed to the tax authority of a partner jurisdiction where that intermediary
is resident or has its place of central management and control.
11 Reportable taxpayer
required to disclose in certain circumstances
(1) Paragraph (2) applies to any reportable
taxpayer that is resident in Jersey and is a user of a CRS avoidance arrangement
or a beneficial owner under an opaque offshore structure.
(2) A person to whom this paragraph applies
must disclose to the Comptroller any information on the arrangement or structure
where such information is not disclosed by an intermediary because that intermediary –
(a) is not a person in
respect of whom the disclosure requirements under Regulation 6 apply; or
(b) is, under Regulation 9,
exempted from disclosing the information required under Regulation 8.
(3) A reportable taxpayer is not required to
disclose any information under paragraph (2) to the extent that the reportable
taxpayer has received documentation from the intermediary demonstrating that
the information has been disclosed by that intermediary to the tax authority of
a partner jurisdiction under mandatory disclosure rules that are substantially similar
to those set out in these Regulations.
(4) Disclosure under paragraph (2) must
include all the information required to be disclosed under Regulation 8
and be made not later than 30 days after the first step has been taken to
implement the CRS avoidance arrangement or opaque offshore structure.
12 Disclosure of arrangements entered
into after 29th October 2014 and before the coming into force of these
Regulations
(1) Paragraph (2) applies where a person
was a promoter in respect of a CRS avoidance arrangement which was implemented
on or after 29th October 2014, but before the coming into force of these
Regulations.
(2) Where this paragraph applies, the promoter
must disclose the CRS avoidance arrangement in question, including the
information required under Regulation 8, not later than 180 days
after the coming into force of these Regulations, irrespective of whether or
not that person provides relevant services in respect of that arrangement after
the coming into force of these Regulations.
(3) No disclosure is required under paragraph (2)
where the promoter has documentation to demonstrate that the aggregate balance,
or value of the financial account subject to the CRS avoidance arrangement
immediately prior to its implementation was less than £600,000.
(4) Despite the interpretation provisions in
Part 1, words or expressions used in this Regulation are to be construed
in accordance with the CRS.
part 3
penalties for failure to comply with
regulations, appeals, miscellaneous and closing provisions
13 Penalties for failure to
provide information or for inaccurate information
(1) A person is liable to a penalty not
exceeding £3,000 if the person fails to –
(a) fails to comply with the
disclosure required under Regulation 6, 11 or 12;
(b) fails to provide the
information required under Regulation 8; or
(c) fails to comply with the
time limits specified in Regulation 7, 11(4) or 12(2).
(2) A person is liable to a penalty not
exceeding £3,000 if –
(a) in complying with a
requirement under Regulation 6, 8, 11 or 12 the person provides inaccurate
information; and
(b) condition A or B is met.
(3) Condition A is that the person knows
of the inaccuracy at the time the information is provided but does not inform
the Comptroller at that time.
(4) Condition B is that the person –
(a) discovers the inaccuracy
after the information is provided to the Comptroller; and
(b) fails to take reasonable
steps to inform the Comptroller.
(5) Liability to a penalty under this Regulation
does not arise if the person satisfies the Comptroller or, (on an appeal under Regulation 15),
the Commission, that there is a reasonable excuse for the failure.
(6) If a person had a reasonable excuse for a
failure but the excuse has ceased, the person is to be treated as having
continued to have the excuse if the failure is remedied without unreasonable delay
after the excuse has ceased.
14 Imposition of penalties
for failure to provide information or for inaccurate information
(1) If a person becomes liable to a penalty
under Regulation 13 the Comptroller may determine the amount of penalty
and impose it on the person.
(2) If the Comptroller imposes a penalty, the
Comptroller must notify the person –
(a) of the reasons for
imposing the penalty;
(b) of the amount of penalty
imposed on the person;
(c) of the date from which
the penalty is due, being not less than 28 days after the issue of the
notice; and
(d) of the person’s right of
appeal under Regulation 15.
(3) A penalty under this Regulation may only be
imposed within the period of 6 years beginning with the date on which
the person became liable to the penalty and, in the case of a person liable to
a penalty under Regulation 13(2), within the period of 12 months
beginning with the date on which the inaccuracy first came to the attention of
the Comptroller.
15 Right of appeal against
penalty
A person upon whom a penalty is imposed by the Comptroller
may –
(a) appeal against it on the
ground that liability to that penalty does not arise; and
(b) appeal against its
amount.
16 Commission of Appeal and
procedure on appeal against penalty
(1) Notice of an appeal under Regulation 15
must be given to the Comptroller –
(a) in writing; and
(b) before the end of the
period of 30 days beginning with the date on which notification was given to
the person under Regulation 14(2).
(2) The notice under paragraph (1) must
state the ground of appeal.
(3) The Comptroller must notify the Commission
of an appeal under Regulation 15.
(4) A Commission of Appeal must be constituted
for the purpose of hearing an appeal under Regulation 15 as it would be
constituted from the Commissioners of Appeal appointed under Article 10(1)
of the 1961 Law for the purpose of hearing appeals under the 1961 Law.
(5) On an appeal under Regulation 15(a),
the Commission may confirm or cancel the penalty.
(6) On an appeal under Regulation15(b), the
Commission may –
(a) confirm the penalty; or
(b) substitute another amount
for the penalty which the Comptroller would have power to impose.
(7) Subject to this Regulation and Regulation 17,
Part 6 (appeals and relief for mistake) of the 1961 Law has effect in
relation to appeals under Regulation 15 as it has effect in relation to an
appeal against an assessment to income tax.
17 Enforcement
of penalties
(1) A penalty under these Regulations must be
paid before the end of the period of 30 days beginning with the date
mentioned in paragraph (2).
(2) That date is the later of –
(a) the date on which the
penalty is due under Regulation 14(2)(c); or
(b) if notice of appeal
under Regulation 15 is given, the date on which the appeal is finally
determined or withdrawn.
(3) A penalty under these Regulations may be
enforced as if it were income tax charged in an assessment and due and payable.
18 Power
to enter business premises and examine business documents or client records
(1) An authorised person may examine and take
copies of any business document or client record that is located on business
premises.
(2) The power under paragraph (1) may be
exercised only for the purpose of investigating any issue relating to
compliance with these Regulations.
(3) An authorised person may at any reasonable
hour enter business premises for the purpose of exercising the power under
paragraph (1).
(4) An authorised person may by notice require
any person to produce any specified business document or client record at the
business premises where the business document or client record is located for
the purpose of enabling the authorised person to exercise the power under
paragraph (1) in relation to that document or record.
(5) An authorised person must not exercise the
powers under this Regulation in respect of any document or record which a
person would, in an action in Court, be entitled to refuse to disclose or
produce on the grounds of legal professional privilege.
19 Obstructing
an authorised person
(1) A person is guilty of an offence if,
without reasonable excuse, the person –
(a) obstructs an authorised
person in the exercise of the authorised person’s powers under Regulation 18;
or
(b) fails to provide such reasonable
assistance as an authorised person may require when the authorised person is
exercising his or her powers under Regulation 18.
(2) A person who intentionally alters,
suppresses or destroys any business document that has been specified in a notice
under Regulation 18(4) is guilty of an offence.
(3) A person who is guilty of an offence –
(a) under paragraph (1)
is liable to imprisonment for a term of 6 months and to a fine;
(b) under paragraph (2)
is liable to imprisonment for a term of 2 years and to a fine.
20 Citation and commencement
These
Regulations may be cited as the Taxation (Implementation) (International Tax Compliance)
(Mandatory Disclosure Rules for CRS Avoidance Arrangements and Opaque Offshore
Structures) (Jersey) Regulations 2020, and come into force on such day as the Minister for External
Relations may by Order appoint.