Monday, June 27, 2011

Jersey spins confusion over zero-ten

The States of Jersey has issued a press release (see below) about its failed zero-ten policy. The press release is designed to delude the people of Jersey about the current status of that policy, and Jersey's Evening Post, easily confused and anxious to please the powers that be, has fallen hook, line and sinker for the line being peddled.

Let's help unravel the mess. The original zero-ten proposals were rejected in February 2011. This came as no surprise to us, and indeed should not have caused surprise in Jersey since Richard Murphy had advised very early on in the policy making process that the proposals would fail for several reasons.

Now the States of Jersey have submitted a different set of proposals. The proposals will be considered by ECOFIN in early Autumn 2011, with a decision expected before the year end. The ECOFIN statement acknowledges that the States of Jersey has made a submission. It says nothing more than that. Philip Ozouf (pictured) might well "look forward to a positive outcome" later this year, but that is merely hope on his part. There is simply no basis on which the JEP can justify its headline "EU gives strong signal that zero-ten will be accepted". This is poor journalism and can only add to the general sense of confusion among Jersey people about the government's tax policies.

ECOFIN considers Jersey’s zero-ten tax regime

ECOFIN met on 20 June 2011 to formally complete the assessment of Jersey’s existing zero-ten tax regime. This meeting focussed on the business tax regime as it stands at the moment, without considering Jersey’s intention to repeal those elements of zero-ten which were deemed harmful by the EU Code of Conduct Group.

These amendments are due to be considered by the Code Group later this year.
In its report to ECOFIN the EU Code Group has welcomed the proposed amendments to the zero-ten business tax regime. The report states –

“Jersey [has] informed the Group about the proposed legislative amendments to [its] legislation, with a view to removing any harmful elements. The Group welcomed these developments and agreed to review such legislative amendments when discussing the rollback of these harmful regimes under the Polish presidency.”

The EU Code of Conduct Group is expected to assess the amended zero-ten regime in September, with a final decision on the proposed amendments expected from ECOFIN in December 2011.

Throughout the assessment of Jersey’s business tax regime, it was clear that the concerns of the Code Group focused on the interaction of the deemed distribution and attribution provisions with the 0% general rate of tax that applies to Jersey resident companies. This view was supported by the findings of a review by the EU Council’s High Level Working Party on Tax Matters in January 2011.

The Treasury Minister, Senator Philip Ozouf, said in response to the Code Group report “Now that the formal assessement of our existing zero-ten regime has been completed, we can look forward to achieving a positive outcome later this year when our proposed amendments are considered.

“The EU Code Group has already welcomed our proposals to repeal deemed distribution and attribution and has agreed to review these legislative amendments later this year under the Polish presidency.

"The welcoming of our action by the Code Group is, in our view, a further important and positive sign, which has been reinforced by statements from London that zero-ten without the deemed distribution provisions is not in conflict with the Code criteria"



-ends-


For further information: please contact Wendy Martin on 01534 440435

For interviews, please contact the Treasury Minister, Senator Philip Ozouf on 07797 713838

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