Jersey Close To EU Savings Tax Decision

by Jason Gorringe, Tax-News.com, London

10 June 2003

With Policy and Resources Committee president Senator Frank Walker due to make a statement on the European Savings Tax Directive today, it appears increasingly likely that Jersey will opt for the withholding tax over exchange of information when the directive comes into force in 2005.

With Channel Island neighbour Guernsey apparently committed to the withholding or retention tax option, and most other European banking jurisdictions such as Switzerland, Luxembourg and Belgium following suit, it would seem unlikely that Jersey would choose to go against the grain, especially since the local finance industry overwhelmingly supports the withholding tax option.

However, should Jersey go the withholding tax route, it will not entirely be plain sailing from here on in. Agreements still need to be bartered with 'third countries' such as the United States and there is also pressure to implement the new Know Your Customer Rules by January 2004.

Importantly for Jersey, as part of the final agreement made by Ecofin last week, Jersey has been granted a further three years to amend exempt companies' legislation, a requirement under the Code of Conduct business tax rules. This means the tax code will have to be fundamentally altered, containing greater emphasis on local taxation.

Recommended