In 2002 political commitment was made in Jersey to reflect the
OECD's principles in promoting transparency and exchange of
information relating to tax matters. Since then Jersey has signed
over 25 Tax Information Exchange Agreements (TIEA's), including
one with India.
What is a TIEA and what is its purpose?
A TIEA is a bilateral agreement between two jurisdictions to
establish a formal regime for the exchange of information relating
to taxes. TIEA's are generally based upon an OECD model
agreement to facilitate a level playing field in terms of how
information is exchanged. The purpose of a TIEA is to act as a tool
in the fight against fiscal crime.
How is information exchanged?
Tax information exchanges are carried out by request only. There
are strict criteria written into agreements stating explicitly that
no 'fishing expeditions' are allowed.
Information requests are sent to the 'Competent
Authorities' of the respective jurisdiction and must include
the following information:
The identity of the person under examination or
The information being sought;
The tax purpose for which it is sought;
Grounds for believing that the information requested is held in
The name and address of any person believed to be in possession
of the requested information, to the extent known;
A statement that the request is in conformity with the law and
administrative practices of the requesting jurisdiction and the
A statement that the requesting jurisdiction has pursued all
means available in its own territory to obtain the
As long as the above process is followed correctly, the
information is provided by the Competent Authority within 60 days
of the valid request being made.
What does this mean for clients who base their affairs in
The process has been designed to protect the privacy and
confidentiality of clients who have set up their affairs legally
and correctly, but to identify those who have committed a fiscal
There is concern amongst clients in India that the TIEA regime
could be open to abuse by the Competent Authority, however the OECD
and the Jersey authorities have carefully designed the process to
minimise any risk of such abuse.
What are the benefits of a TIEA?
Jersey is highly ranked as a top tier international finance
centre and it achieves this by complying with international rules,
regulations and best practice. Many clients use Jersey as they feel
reassured by this reputation. In order to retain this reputation,
Jersey needs to demonstrate these qualities and this includes
The Indian Government announced in their last budget the issuing
of a blacklist called the Notified Jurisdiction list, made up of
jurisdictions that are not effectively exchanging tax information.
The penalties for being on this list are significant and include
onerous reporting requirements and large withholding tax payments.
By signing the TIEA, Jersey should not be included on this
blacklist, resulting in significant benefits to clients who use
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).