Jersey In Excellent Shape, Ozouf Tells IoD

by Jason Gorringe, Tax-News.com, London

18 July 2011

Jersey is in good if not potentially in excellent shape from an economic perspective, Treasury Minister Phillip Ozouf told the Institute of Directors in a recent speech.

"Finance, is once again beginning to grow and new, exciting opportunities in new sectors are being developed," Ozouf told the IoD. "More than that, our plans for States internal reform are now well under way. Unlike other countries, whilst we started from relatively positive place – we have taken tough decisions."

These decisions, he said, include using the Stabilization Fund to support islanders and business through the downturn and fund the deficit in 2010, securing an increase to the goods and services tax and proposing an increase in Social Security contributions for employers for higher earners.

"This is not a short term plan. This is the start of a five to 10-year strategy to deliver both savings, and a revitalized, reorganized, rejuvenated public sector," he said.

The plan also sets out how Jersey intends to develop its tax policy and reform its tax collection system to improve compliance, he added.

Ozouf continued:

"As ever, the finance industry remains a vital part of Jersey’s economy. The government, in partnership with the Jersey Financial Services Commission, Jersey Finance, and industry, must now work harder than ever to ensure future growth of this sector."

"I am delighted that missions to the growing economies of the world are now bearing fruit, as I myself witnessed during my visits last year to Mumbai, Delhi, Hong Kong, Shanghai and Washington. We must continue this strong focus on emerging markets, especially while the UK, European and US economies are finding the return to growth challenging. There is good, reputable business to secure in Asia Pacific, the Middle East and the Commonwealth of Independent States."

"As we sign a series of Latin American tax agreements, starting with Argentina, I am also optimistic of significant new business from these growing areas of the world."

"Critical to this is the support that we have dedicated to raising Jersey’s international profile. Developing better links in these economies represents a huge opportunity for Jersey."

Changes to Jersey's tax system will ensure stability for investors and boost Jersey's appeal, Ozouf noted. Changes to the zero-ten regime's deemed distribution rule, necessitated by the EU Code of Conduct Group on Business Taxation's review, ensures that Jersey's tax system falls within international standards whilst still retaining its appeal, and enhancements to the 1(1)k regime for high-income earners, is expected to generate further revenues as uptake increases.

Furthermore, other developments such as the signing of a Memorandum of Understanding between the Beijing-based international telecommunications company UTStarcom and Jersey Telecom will notably improve Jersey's prospects going forward, Ozouf said. The two firms are to work together on the research, testing and development of new products for global markets. This partnership will make the most of JT’s fibre-optic broadband, which provides the network speed, resilience and capacity necessary for UTStarcom to use Jersey as its European hub.

Ozouf added:

"This is an example of how diversifying geographically can enhance not only finance but other high-value technology opportunities that already exist here. As a shareholder of Jersey Telecom we are discussing the roll-out of their enormously exciting plans to ensure that Jersey is an international leader for businesses using fibre optic technology."

"With these various reforms in place, I believe we can say - with strong public finances, low tax , with heads held high - that from Sydney to Shanghai; from Singapore to the cantons of Switzerland and from St Petersburg to Sao Paulo – we are open for good quality business."

He concluded:

"The coming three years need to focus not on tax but on developing the economy, building employment for islanders and sustaining the investment necessary to keep Jersey competitive while also providing top quality value services," Ozouf said.

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