The Jersey government is looking to address issues of “economic substance” raised by the European Union in a bid to remain off an oficial list of non-cooperative tax jurisdictions.
First published in December 2017, the EU “blacklist” did not include Jersey or any other crown dependency.
The islands were, however, placed on a “grey-list”, meaning they had agreed to meet issues of “economic substance” within one year or risk being downgraded.
Economic substance
In June, the EU Code of Conduct Group published information on how grey-listed jurisdictions could meet the “substance” requirements.
One factor taken into account is whether companies claiming tax residency in a jurisdiction have physical offices and high-level employees based there.
The conduct group said resident firms should be required to produce business plans explaining the commercial reasons for holding intangible assets in a jurisdiction.
Meeting requirements
Jersey’s consultation, which began on 6 August and ends on 31 August, looks to produce legislation that meets these tax residency requirements.
“This consultation is designed to seek feedback on the outline proposal so as to inform drafting of the relevant laws and allow government to ensure a smooth transition for companies carrying on relevant activities,” the consultation paper says.
Ian Gorst, minister for external relations for Jersey, said the consultation on the policy proposals represents the “latest step” in the evolution of the island’s international tax policy, and maintains its “longstanding commitment to tax neutrality combined with transparency”.
“Our island is one of a number of jurisdictions that have been engaged in dialogue with the EU as part of the ‘listing process’,” he said.
Other jurisdictions on the grey-listed include Guernsey, the Isle of Man, Bermuda and the Cayman Islands.
“The government of Jersey continues to work in lockstep with the governments of the other crown dependencies to ensure a fully coordinated and consistent approach to the development and delivery of this policy,” Gorst said.
