Jersey's financial sector fights to keep zero-ten tax
regime
26 August 2010
The Jersey government has agreed to delay a
decision on the proposed reform of its existing zero-ten
corporation tax regime.
Jersey - along with Guernsey and the Isle of
Man - is under pressure from the European Union to abandon the
system, under which the large majority of firms pay no corporation
tax.
EU member states consider zero-ten to be a
"harmful tax practice" that hurts their own economies, and the EU's
Code of Conduct Group plans to review all the crown dependencies'
zero-10 tax regimes in September.
However, Jersey Finance has now issued a
strong statement urging the State’s government to retain the
zero-ten regime, or as much of it as possible.
The organisation says dropping it could damage
Jersey's future as a financial centre. Thirty out of the 49 member
firms who responded to a survey opposed any change other than
minimal adjustments.
The Jersey Finance statement was a response to
a government consultation paper issued in June. The consultation
period was due to expire on Monday (30 August) but the government
has now agreed to extend it for at least another two weeks.
Jersey Finance technical director Heather
Bestwick said the government must "think carefully before any
alternatives to zero-10 are considered".
The government's consultation paper in fact
offered five alternatives, which include a flat rate of at least 10
per cent corporate tax, as well as complete abolition of corporate
tax accompanied by a rise in other types of taxes.
The island's annual budget statement is due in
October, setting a limit to delays. In the meantime corporation tax
remains as zero-ten, and the government has promised that any
changes will not be retroactive.
Sources
International Adviser
Jersey Finance
Jersey Finance (2)
Jersey Government
(Consultation paper)