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Jersey Breaking Ground On Bitcoin, Clarifies Tax Rules

by Jason Gorringe,, London

15 July 2014

Jersey has become the first jurisdiction in the world to successfully establish a regulator-approved Bitcoin investment fund, and has set out rules on the taxation of cryptocurrencies. The open-ended fund is due to launch on August 1, 2014.

Jersey's Comptroller of Taxes has stated that Jersey's income tax provisions on foreign exchange activities will apply to the profits and losses of a business entering into transactions involving cryptocurrencies. With regard to Goods and Services Tax (GST), the value of the supply of goods or services on which GST is due will be the sterling value of the cryptocurrency at the point the transaction takes place.

At present Jersey has no specific Anti-Money Laundering legislation relevant to cryptocurrencies, such as Bitcoin. The Jersey Financial Services Commission is of the view that an in-depth analysis of the risks posed by crypto-currencies needs to be carried out before an appropriate and proportionate anti-money laundering regime can be introduced, and proposals are expected by the end of 2014.

Philip Ozouf, Jersey's Assistant Chief Minister, said: "This is believed to be the first regulated Bitcoin fund in operation and Jersey is pleased to be paving the way. Fintech, which broadly defines the emerging digital industry in finance, is a sector that I believe holds significant opportunities for Jersey. In April this year, when I presented the Government's policy framework for the future of our financial services industry, I made it clear that innovation will be central to Jersey's future prosperity. I also emphasized that Government will offer its full support for innovative measures undertaken by industry and the regulator."

"I therefore welcome the decision of the Jersey Financial Services Commission to approve the launch of the island's first regulated Bitcoin fund. We are working closely with the Commission, industry, and Digital Jersey to help develop the island as a natural hub for fintech business. We are committed to maximizing the benefits and opportunities of cryptocurrencies like Bitcoin in a well-regulated environment."

TAGS: environment | tax | business | value added tax (VAT) | financial services | international financial centres (IFC) | Jersey | offshore | legislation | currency | regulation | services | VAT goods & services classification | Investment | Invest | Investment | Tax

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