A snap-shot of some forthcoming 'transparency' deadlines

appeared in Connect Jersey, March 2017

Kelly Tadier, PwC  CI- Senior Manager, Tax

A number of high profile cases in recent years have highlighted harmful tax practices achieved by cross-border structuring. Whilst those involved are often working within relevant legal parameters, there is now, more than ever, a call for co-operation and transparency in tax matters between jurisdictions. Resulting international agreements and supporting domestic legislation have drastically altered the obligations of entities to gather and disclose detailed information surrounding their operations, owners and controllers. 

The below provides a snap-shot of some forthcoming ‘transparency’ deadlines:

US FATCA

Those clinging to the hope of a Republican repeal of FATCA (the Foreign Account Tax Compliance Act) may have a long wait. For the time being at least, the agreement to exchange data with the United States remains in force.

To comply, entities (including companies, foundations, partnerships, trusts and similar) must determine whether they meet the criteria of a ‘financial institution’. Those who do face a series of additional challenges to identify, value and report interests held by or on behalf of US Citizens or tax residents.

With 2017 being the third year that Jersey will send FATCA data to the US, we will likely see penalties now being levied against those who neglect their obligations. The deadline for submission is 30 June.

CRS

Sharing many similarities with US FATCA, the Common Reporting Standard is substantially wider in its application. In 2017, entities classified as financial institutions must review account holder information, reporting those account holders (or controlling persons) resident in 1 of 53 other reportable jurisdictions.  This number almost doubles in 2018, seeing data exchanged with over 100 jurisdictions.

With audits of FATCA and CRS promised by the Taxes Office, businesses should be vigilant in ensuring that procedures, workflows and reporting outcomes are documented.

The deadline for submission to the Comptroller of Taxes is 30 June.

CbCR Notifications and Reporting

Country by Country Tax Reporting Regulations were adopted by the States Assembly in December 2016, introducing obligations for group entities of certain high value multinational enterprises to submit consolidated data on an annual basis.

Jersey resident entities within such a group may be required to report, or otherwise submit notifications, to the Taxes Office.

The first deadline for notifications was extended to 31 March.

UK Requirement to Correct

Whilst not a local obligation, fiduciaries should be alert to the ‘requirement to correct’ contained within the UK Finance Act 2017. The legislation obliges UK tax payers with previously undisclosed liabilities, or where an incorrect amount of tax has been paid, to put their past affairs in order. A series of tough financial penalties and sanctions face those who fail to correct past errors.

With CRS (and previously UK FATCA), putting information in the hands of HM Revenue and Customs, local businesses may wish to engage with UK clientele to ensure they are adequately informed of this matter.    

Jersey Disclosure Opportunity

In a similar vein, the Jersey Taxes Office is offering residents the opportunity to voluntarily disclose and correct information filed on their Jersey tax returns for years up to and including 31 December 2015. Those who make disclosures under this opportunity between 3 April and 31 December 2017 will not be subject to penalties or interest (though late payment surcharges might apply).

Register of Beneficial Ownership and Control

Jersey corporate and legal entities must supply details about ultimate beneficial owners to the Jersey Financial Services Commission between 1 January and 30 June 2017 (apart from Foundations, subject to obligations later this year). This filing is mandatory; will refresh and verify data on the centralised register that has long been maintained by the JFSC; and is passed to other jurisdictions only upon request. 

A new requirement to notify changes to beneficial ownership within 21 days is also underway.

In summary

With transparency just one of many projects requiring attention, we urge local businesses not to underestimate the time, resource and IT technical support necessary to comply with data exchange demands.