On 24 January 2022 the OECD’s Inclusive Framework published the stage 2 peer review report on Jersey’s compliance with the minimum standard under Action 14 of the project on base erosion and profit shifting (BEPS). Action 14 is concerned with making tax dispute resolution mechanisms more effective. Countries that have joined the Inclusive Framework are monitored in the peer review process to assess their compliance with the minimum standard.

The peer review report notes that Jersey has concluded around 30 double tax treaties and has a small mutual agreement procedure (MAP) inventory with relatively few new cases submitted each year. No MAP cases were pending on 31 December 2020.

Jersey has now resolved most of the remaining issues raised during the first peer review. All but one of the double tax treaties concluded by Jersey contain a provision relating to the MAP, and the treaties generally follow the provisions of paragraphs 1 to 3 of Article 25 of the OECD Model.

However, more than 10% of the treaties do not contain the equivalent of the first sentence of Article 25(2) of the OECD Model, requiring the competent authority to endeavour to resolve a MAP case by mutual agreement if the taxpayer’s issue is justified.

More than 10% of the treaties do not include a provision requiring mutual agreements to be implemented regardless of any time limits in domestic law; and do not include the alternative provisions for Article 9(1) and Article 7(2) to set a time limit for making transfer pricing adjustments.

Jersey has signed and ratified the multilateral instrument (MLI) to incorporate tax treaty related BEPS provisions into its treaties. The MLI is being used to modify a number of its tax treaties to meet the requirements under the minimum standard. In the case of treaties that cannot be modified using the MLI, Jersey intends to update these treaties through bilateral negotiations, which have already begun.

Currently Jersey does not have a bilateral advance pricing agreement (APA) programme.

Jersey meets all the requirements regarding the availability and access to MAP under the minimum standard. It provides access to MAP in all eligible cases; and has in place a documented bilateral consultation process for cases where the competent authority considers that the issue raised by taxpayers in the MAP request is not justified.

Jersey has issued comprehensive guidance on the availability of the MAP and the practical application of the procedure under the tax treaties.

Jersey resolved all its pending MAP cases from 2016 to 2020, but resource constraints did not allow it to report MAP statistics, match those statistics with treaty partners or participate actively in the stage 2 peer review process. Jersey should therefore monitor the available resources for the competent authority function and consider if they are adequate to permit resolution of future MAP cases in a timely and effective way.

Jersey’s competent authority operates independently of the audit function and adopts a cooperative approach to the MAP. The performance indicators used are suitable for carrying out the MAP function. Jersey did not however submit MAP statistics under the MAP Statistics Reporting Framework for all applicable years or match its MAP statistics with all its treaty partners.

Jersey monitors the implementation of MAP agreements. However, due to its domestic statute of limitation, there is a risk that agreements cannot be implemented if the applicable tax treaty does not contain the equivalent of the second sentence of Article 25(2) of the OECD Model, requiring implementation regardless of time limits in domestic law.