Jersey Wrestles With Concept Of Zero Company Tax

by Jason Gorringe, Tax-News.com, London

11 June 2003

As a Jersey working party gets to grips with the implications of a zero company tax regime, experts have warned that the jurisdiction has many obstacles to overcome in the sphere of taxation in the coming months as it works towards compliance with European business Code of Conduct rules.

John Riva, the president of the Jersey Taxation Society and a member of the aforementioned working group told the Jersey Evening Post recently that a single workable solution to the tax conundrum has yet to be found. "The real issue here is zero taxation, and so far no one has cracked it. Essentially we are tearing up the current tax law and starting again," he observed.

Meanwhile Richard Boleat, president of the Jersey Association of Trust Companies, highlighted the fact that zero tax regimes have global precedents, namely in Bermuda and the Cayman Islands, where he said the system has worked to good effect. He also pointed out that zero taxation would provide a boost for the tourist industry, particularly to the hotel trade.

However, Boleat warned that the island will have to allocate more resources than it currently has towards negotiation of bi-lateral treaties with all of the EU member states. "We have John Harris [Policy and Resources adviser on finance] and Colin Powell, but they have other things to do. We need a delegation of professionals, and there are not enough of them," Boleat told the JEP.

Observers have suggested that Jersey will benefit significantly in the long run from these negotiations. International tax lawyer Richard Hay, for example, believes that it will present an excellent opportunity to educate Europe about Jersey and change the somewhat negative perception held by many that the island is a harmful tax haven. "The negotiations provide an opportunity to secure some benefits, to come to the table and obtain enhanced market access to EU countries. There is an opportunity to expand the business platform here," Mr Hay, who also praised the island's authorities for taking a patient approach regarding the EU Savings Directive, explained to the Jersey Evening Post.

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