Jersey has this week adopted an international measure designed to stop multinationals from shifting profits between countries to avoid paying tax. The practice, known as base erosion profit shifting (BEPS), has been targeted for action by the Organisation for Economic Cooperation and Development (OECD).
Jersey is the third jurisdiction, alongside Austria and the Isle of Man, to have completed its domestic ratification for the OECD’s Multilateral Instrument (MLI), the process by which countries will be able to implement the OECD’s anti-avoidance measures.
The MLI will come into effect once two further jurisdictions (five in total) have ratified the MLI.
Jersey has been part of an ad hoc group of jurisdictions that have worked together to develop the MLI. The island was 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 June this year.
The MLI will modify existing bilateral tax agreements to make them BEPS-compliant, allowing Jersey to strengthen its tax treaty network.
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 can 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.