UK Budget Move Could Signal More Tax Trouble For Jersey

by Jason Gorringe, Tax-News.com, London

22 April 2002

Measures announced in Chancellor Gordon Brown's Budget speech last week could result in more tax misery for Jersey, if the ongoing dispute over non-resident savings taxation within the European Union is not swiftly resolved.

Under new enabling legislation, the Treasury will be able to levy taxes on UK firms and controlled foreign companies located in overseas jurisdictions 'where harmful tax practices are prevalent'.

Given the current standoff between the UK government and the States of Jersey authorities over information exchange on non-resident savings interest, there are fears that this could apply to many British owned companies operating from the Channel Island jurisdiction.

A report in the Jersey Evening Post on Thursday referred to the 'trail of signals with long-term implications for the Island's economy' given by Mr Brown, and predicted that:

' If Jersey was included in a list of such territories, it would affect a number of the big high street names with sizeable operations in the Island, including retail banking operations such as Barclays and RBSI, as well as retail stores including firms such as A. de Gruchy, which is owned by a UK company.'

If no agreement can be reached on the savings tax issue and the UK government did decide to act, British owned companies based on the Island could face an an additional 10% tax, on top of the 20% corporate rate already payable in Jersey.

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