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Jersey To Change ISE Fees For Trusts

by Jason Gorringe,, London

22 October 2012

The Jersey government is seeking industry input on improving the fairness of the island's International Services Entities (ISE) regime, in a public consultation launched on October 17, 2012.

The ISE regime was introduced in parallel to Goods and Services Tax (GST) in 2008 as an alternative to GST registration for businesses that mainly serve non-residents. It was primarily created to raise revenue from businesses in the financial services industry while helping to reduce the administrative and compliance burden that GST would place upon them. Businesses that meet certain conditions can become an ISE if they pay an annual fee. That fee varies depending on the type of business.

The latest Green Paper follows a review in 2011, during which the government consulted businesses on the ISE regime, in part to achieve greater equity between the ISE fees charged to different kinds of businesses. The government reported that this exercise made it clear that businesses in Jersey value the ISE regime and consider that, on the whole, it achieves its aims of collecting revenue with a minimum of cost and complexity. However, respondents also considered that ISE fees are proportionately greater in some sectors than others, particularly for trust companies.

Introducing the latest consultation paper, the island's Minister for Treasury and Resources, Philip Ozouf, explained: “The ISE regime was developed to raise revenue whilst minimizing the compliance burden on companies that are primarily exporters. It is important that the regime is seen to be fair for the businesses involved."

He added: “Respondents to the 2011 consultation said most aspects of the ISE system are working well, but trust companies felt that charges could be made more equitable. This Green Paper explores ways of doing that. I would encourage all affected businesses and interested parties to respond to the Green Paper in order to ensure that their views are heard.”

The annual fees payable by ISEs have been increased twice in the past two years, and now raise a total of GBP9.3m (USD15m) for island coffers. The government hopes to make revenue-neutral changes, and the consultation specifically considers options for amending the fee structure for trust companies so the current “basic” GBP7,500 fee element is replaced with scaled charges that better reflect the size of the business in question. Clarification of who is liable to pay the GBP200 “vehicle” element of the trust company fee is another aim of the consultation exercise.

TAGS: tax | investment | business | trusts | international financial centres (IFC) | goods and services tax (GST) | Jersey | fees | offshore | offshore trusts | tax rates | services

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