The so-called ‘FATCA’ agreements had been agreed to in principle by all three of the Crown Dependencies already. Yesterday’s signings by Jersey and Guernsey came a little more than a week after the Isle of Man became the first to sign off on a similar agreement.
Perhaps symbolically, Jersey and Guernsey officials signed their agreements side by side at a ceremony in London. , attended by exchequer secretary to the Treasury David Gauke. In the past couple of years, the Channel Islands neighbours – separated by just 42km, or 27 miles, of English Channel waters, but a fair bit of history – have been looking to work more closely together, particularly in matters such as this, in which there is nothing to be gained by operating independently.
All three UK/Crown Dependency agreements are described as having been based on the ‘Model 1’ Foreign Account Tax Compliance Act agreements that the islands, among other jurisdictions including the UK, are signing with the United States.
Peter Harwood, chief minister of Guernsey, represented that island in signing the IGA, while Jersey was represented by its chief minister, Sen Ian Gorst.
As reported, US lawmakers drafted FATCA in 2010 as part of an effort to crack down on those Americans who make use of overseas financial institutions to avoid paying ther US taxes.
The implementation dates for the controversial legislation have been postponed twice, to enable those charged with complying with it to have time to develop the necessary systems. At present most of the reporting will begin to be phased in next year.
Because it obliges non-US financial institutions to take on the burden of detecting and reporting Americans with overseas bank accounts, lawmakers for other countries, such as the UK, saw an opportunity to extend the reporting infrastructure as it is being set up to capture information about non-Americans, such as UK taxpayers with bank accounts in Jersey, Guernsey, and/or the Isle of Man.
‘Determination to tackle tax evasion’
Officials from both Jersey and Guernsey noted that their signing of the agreement with the UK to "enhance" the automatic exchange of tax information "demonstrated" – as Guernsey Finance chief executive Fiona Le Poidevin, who was not present but issued a statement, put it – "our determination to tackle tax evasion".
“This agreement once again demonstrates our long-held commitment to international cooperation on tax matters," added Jersey chief minister Gorst.
"It sends another clear signal that Jersey has no need or desire to tolerate tax evasion, or aggressive tax avoidance."
