Jersey Lures Wealthy Residents With Tax Change

By Phillip Morton, Investors Offshore.com

13 June 2011

Jersey's Treasury Minister Phillip Ozouf has announced proposed changes to tax legislation to encourage new High-Net-Worth Individuals (HNWIs) to the island.

If approved, the new regime will remove the distinction between income earned within and outside Jersey. Under the new rules the income for new so-called '1(1)(k)s' would be taxed at 20% on the first GBP625,000 of income and at a rate of 1% thereafter. This would apply to anyone whose application is made for the first time on or after the date on which the amendment comes into force.

Currently, HNWIs under the 1(1)(k) initiative pay a rate of 20% on the first GBP1m of their worldwide income, 10% on the next GBP500,000, and 1% on income thereafter.

Ozouf explained that the current regime, which taxes all Jersey income at 20%, discourages HNWIs from investing in Jersey, because they are taxed more on their Jersey income than on similar investments outside the island.

However, since December 2010, HWNIs party to the initiative have been required to contribute a minimum of GBP125,000 in annual revenues to Jersey coffers, up from GBP100,000.

The changes are consistent with the announcement of the Treasury Minister in December 2010.

Explaining the decision Ozouf, said:

“We need a simple and competitive tax structure to encourage high-net-worth individuals to bring their investment and businesses to Jersey. People who want to invest in our island are welcome and we need to do everything we can to let them know that Jersey is open for business.”

“The review of the regime is continuing and further updates will be given in the budget. This is an important first step to encourage more wealthy people to come to the island.”

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