Jersey And IoM Plump For Withholding Tax

by Robin Pilgrim, LawAndTax-News.com, London

12 June 2003

Jersey and the Isle of Man revealed on Tuesday that they will both be following Guernsey's example, and will, from January 2005, levy a withholding tax rather than exchange information on the savings interest of EU residents.

According to the Jersey Evening Post, speaking to States members on Tuesday morning, Policy and Resources president, Senator Frank Walker observed that although Jersey does not belong to the EU, it is in the jurisdiction's best interests to cooperate with the European body and adopt a 'good neighbour' attitude.

'We believe that a high international standing for Jersey brings tangible rewards to our finance industry and to the Island generally,' he explained, continuing: 'This good reputation is best achieved by constructive engagement with international institutions and governments.'

The P&R chief also welcomed the European Union's acceptance of Jersey's proposals and time-frame for coming into compliance with the Code of Business Conduct directive.

Meanwhile, Jersey's finance industry gave its support to the government's decision. In a statement released after the Tuesday announcement, Jersey Finance chief executive, Phil Austin commented that:

'This proposal reflects the views of the majority of our industry members and we believe it is in the best interests of our industry going forward. It will give customers affected by the EU agreement a choice. EU resident investors with savings held in Jersey will be able to either opt for the retention tax, or authorise disclosure of the interest earned to their home authority.'

He went on to add:

'Since some of the EU member states and our major competitors have opted for a withholding tax, we are pleased that our government now proposes to move in the same direction. This will preserve our competitiveness as a finance centre, which is so important to the long term future of our leading industry.

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