Jersey trumpets its cooperation on tax with the USA whilst refusing the most basic information exchange with the UK

Posted on October 9 2012

Jersey issued a press release this morning saying:

The Governments of Guernsey, Jersey and the Isle of Man are today, Tuesday 9 October 2012, simultaneously announcing their intention to negotiate partnership agreements with the United States of America to implement FATCA.

Jersey's Chief Minister, Senator Ian Gorst, said “Implementing FATCA is necessary for our finance industry to remain competitive and doing so through an intergovernmental agreement is considered to be the best course to adopt. It is our intention to negotiate this with the US Government, in partnership with Guernsey and the Isle of Man .

“This is also the course being adopted by many other countries, and it has industry support. This announcement is intended to provide certainty for our industry as they prepare for FATCA. Entering into this type of arrangement will also highlight and confirm our commitment, as a well-regulated jurisdiction, to the international principles of tax transparency and exchange of information.

All of which is a load of rubbish.

Let's talk facts. FATCA is the new US legislation properly called the Foreign Account Tax Compliance Act. The IRS says of it:

The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts.

Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return, starting this tax filing season.

In addition, FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

Let's be blunt about it: the US is basically saying to banks who want to trade in the US either tell us which US citizens you maintain accounts for offshore or get the hell out of here. There's more detail here. Jersey has no choice about adopting these laws: if it wants US banks in Jersey (actually, any bank with a US branch in Jersey) then it has to cooperate with the US on FATCA.

So the nonsense about Jersey showing commitment is just that: it is cooperating at the end of a gun.

And the lie is exacerbated by the fact that despite the claims of cooperation to be offered to the USA Jersey still refuses to cooperate in full with the European Union Savings Tax Directive. It deliberately harbours tax evaders from the EU, and the UK in particular, in its banks by refusing to co-operate on full information exchange under that Directive so that information on the income paid to people in Europe is provided to the state in which they live. Tax withholding on the basis of anonymity - the sole and only purpose for which can be assisting tax crime - is Jersey's chosen non-cooperative option instead.

So please stop the nonsense Jersey: you're a totally non-cooperative jurisdiction that only takes any action to stop crime when threatened. To put it another way, you're as morally bankrupt as you are going to be financially.

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5 Responses

Premier Sharehoders Group says:

October 9 2012 at 10:05 am

Interesting comments Mr. Murphy.
That the Troika (triumvirate) of slimy Jersey, desolate Isle of Man and comic Guernsey will be forced to cooperate with the US on FATCA is a charade …. Be assured that the sham pow-wow on compliance held by these three slippery governments is only a faÃ§ade to disguise means of circumventing FACTA.

These are SECRECY jurisdictions where nothing is as it seems and where “regulation” is wholly and only concerned with protecting illegal financial activities … once the Troika formulate their customary foxy plans don’t for a moment believe that they will conform to any regulation if it involves exposing their professional criminal clientele — including US tax cheats.

It’s what they do, depend on for a living and will continue to do regardless of the rule of law.
Why should FACKTA be any different to the European Union Savings Tax Directive?
If you listen carefully you will already hear them chortling at (some of) the world’s naivety.
Anthony Zappia says:

October 9 2012 at 11:55 pm

Richard, don’t these havens still have a way out with the U.S., in the sense that they (the Americans) actually have to have some proof that Jersey is actually harboring money from U.S. citizens?
Havens like Jersey can issue a statement to the effect of “as at June 30th, we have no accounts from citizens in the U.S.” In order for the U.S. to bring its power to bear, it has to know these places actually have Citizen X’s money. So it all comes back to this problem with secrecy. Short of these places allowing IRS (or HMRC and ATO for that matter) inspectors in to look at the books, how do we break down these ‘walls’ they’ve put up?
- Richard Murphy says:
  
  October 10 2012 at 9:06 am
  
  That would require them to kick out every bank with a US activity
  
  Unlikely……
- Premier Sharehoders Group says:
  
  October 10 2012 at 10:39 am
  
  Yes Anthony Zappia you’ve got it.
  It’s all a giant sham and until these “walls” of secrecy are “broken down” nobody will ever know exactly what is going on …..
A few open questions for Jersey Â» Tax Research UK says:

October 10 2012 at 8:15 am

[…] gather that the higherÂ echelonsÂ of power were pleased by my commentary on their press release on FTACA yesterday – which by some oversight they forgot to send to me direct – and so I thought I’d […]