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Jersey Considers Ways To Claw Back Tax Shortfall

by Jason Gorringe,, London

28 November 2002

Following Policy and Resources Committee president, Senator Pierre Horsfall's announcement last week that subject to the approval of the States authorities, Jersey will impose a zero rate of corporate tax on companies located on the Island, several proposals as to how to claw back lost tax revenue have been put forward, according to the Jersey Evening Post.

The newspaper revealed earlier this week that: 'although a zero corporate tax rate will bring Jersey into line with the Isle of Man and Guernsey, it leaves an estimated gap of around £200 million - approximately 60% of the Island's annual tax take and 40% of total States income.'

However, speaking to the JEP on Monday, Income Tax comptroller, Malcolm Campbell explained that the zero tax rate will not apply to the finance sector, or to utility companies, which will be taxed at a special rate. One other, as yet unnamed, sector will also be exempted from the zero rate of tax, Mr Campbell revealed, adding that:

'All Jersey residents with company directors and shareholders will be liable to a charge, which will claw back a lot of the revenues. But I must stress that these are only proposals.'

Although, according to the Jersey Evening Post, the move has been broadly welcomed by the Island's businesses, there have been calls for clarity with regard to the implications for the future of Exempt Company and International Business Company structures, the former of which is widely used by overseas investors, and the latter by international financial service providers.

'A zero rate for most Jersey companies should protect the pipeline of business which currently comes from the Exempt Company. But we urgently need clarity on a competitive tax rate for the finance sector, to replace the International Business Company. The industry will press for this, and rightly so,' PricewaterhouseCoopers tax partner, Jane Stubbs explained to the locally-based newspaper earlier this week.

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