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Wednesday, 14 September 2011

"His Lordship Speaks"

Zero 10 given green light

Jersey's Zero 10 tax regime has been given the go-ahead by officials.

Last year, experts at the European Union told the island that parts of the corporate tax regime were harmful.

At a meeting yesterday the Code of Conduct Group said they believed the harmfulness of the regime had been removed.

Senator Terry Le Sueur said: "Following the ongoing Review of our Business Tax Regime, the Treasury Minister proposed, and the States then agreed, legislative amendments which aimed to remove elements of our legislation that were considered harmful by the Code Group.

"At its meeting yesterday, 13 September, which was attended by Jersey officials, I am pleased to report the Code of Conduct Group accepted that our rollback proposal would remove the harmfulness of our regime. This has to be ratified by ECOFIN in December at the end of the Polish Presidency."

So where did the States go wrong before?

They assumed that shareholders would be given a dividend each year of 60% of the profits of their company. The States then taxed shareholders on that assumed 60% payout.

But some shareholders were given far less than that assumed amount, yet still had to pay the tax on the higher figure and so ended up paying more in tax than necessary.

This so-called deemed distribution was said to be harmful, especially as foreign shareholders were taxed on the dividend they actually received not an assumed amount.

From now on, shareholders will only be taxed on the profits they actually receive.

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