Jersey consults on changes to CRS and FATCA regulations

Monday, 12 February 2024
Jersey has begun a consultation on proposed changes to its regulations governing automatic exchange of tax information (AEOI) under the OECD Common Reporting Standard (CRS) and US Financial Account Tax Compliance Act (FATCA). The consultation is open until 18 March 2024.

The changes are intended to keep Jersey's legal framework for the CRS in line with global expectations, by addressing some areas of potential uncertainty. These amendments to the CRS regulations will also be made to the FATCA regulations where appropriate.

According to Minister for External Relations, Deputy Ian Gorst, the current round of reviews of Jersey's implementation of the CRS have identified some minor potential deficiencies in the jurisdiction’s domestic legislation. One of these relates to the obligations of entities without legal personality, such as trusts, and the application of penalties to them.

Under the current AEOI rules, certain types of arrangements without legal personality are classed as entities in their own right, with obligations imposed on that basis. This could potentially lead to confusion over who is required to fulfil the obligation of the arrangement or pay any penalties imposed for non-compliance. It is therefore proposed that a new regulation should be inserted to clarify that, where an obligation or penalty is imposed on an entity without legal personality, the obligation or penalty is imposed on each trustee of a trust on a joint-and-several basis, the 'responsible partner' of a partnership or the secretary of a limited liability company. An additional provision clarifies that these provisions do not preclude the recovery of any penalty imposed from the assets of the relevant arrangement.

Others matters addressed include giving Revenue Jersey powers to access the premises of a financial institution or trustee-documented trust, if the trustee is not a professional trustee and may not have any business premises from which Revenue Jersey could examine the trust documents to confirm compliance with the AEOI standard.

A further adjustment concerns the scope of the anti-avoidance rule. At the moment, the guidance appears to restrict its impact to arrangements taken by a person to avoid an obligation placed upon them by the regulations. The government wants to remove this restriction so the rule can be applied where the person entering into the avoidance arrangements was not a person who had any obligations themselves under the CRS regulations.

The changes will also address industry concerns over how certain penalties are imposed under the CRS and FATCA regulations. Currently, neither set of regulations include a penalty for the late filing of a return and a more general penalty regime is used. The paper addresses industry concerns about this by introducing a new stand-alone penalty for late filing of returns and amending the existing penalty regime to allow the comptroller to exercise discretion over the amount charged.

The consultation proposal does not implement the revisions to the CRS approved by the OECD and G20 during 2023 regarding the Crypto-Asset Reporting Framework, which are intended to come into force from 2026. The government plans to consult on implementation of these rules later in 2024, before introducing the necessary legislation in 2025.


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