Jersey Awaits EU 'Zero Ten' Decision

by Jason Gorringe, Tax-News.com, London

29 June 2011

The government of Jersey will learn later this year whether proposed amendments to the jurisdiction's 'zero ten' corporate tax regime will mean that the tax system is no longer considered 'harmful' by the European Union (EU).

At its meeting on June 20, the European Council of Finance Ministers (ECOFIN) focused 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, the Jersey government reported.

The regime is due to be considered again by the Code Group, appointed to review Jersey's zero-ten regime, in September. This will allow the territory time to revise aspects of the regime which are expected to be deemed 'harmful', in particular its deemed distribution and attribution provisions, with a final decision expected from ECOFIN by December 2011.

According to the Jersey government, the EU Code Group's report to ECOFIN did however welcome the proposed amendments to the zero-ten regime, the report stating that:

“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.”

Jersey Treasury Minister, Senator Philip Ozouf, said in response to the Code Group report:

“Now that the formal assessment 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, an 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."

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