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Jersey To Incorporate Ports And Airport

by Jason Gorringe,, London

02 August 2012

The Jersey government has announced proposals to amalgamate the bodies responsible for the management of the island's ports and airport, into a single, incorporated commercial entity to generate "a positive return to the States" and help speed improvements to domestic facilities.

Under the plans, the two agencies responsible for the management of Jersey's maritime and aviation affairs, Jersey Airport and Jersey Harbours, would be merged into a single entity from January 1, 2015, to be known as Jersey Ports. The entity will be incorporated as a 100% States-owned utility company, and would therefore pay tax on profits, as well as dividends, increasing its contribution to state finances. The majority of profits however are to be reinvested into efforts to enhance the island's offering.

The assumption is that taxation will be charged at 20% of net profit before depreciation, and after an estimate for capital allowances payable in the following year. The pension liability has also been deemed a tax deductible expense.

"The financial model for incorporation indicates that of the potential GBP140m (USD217m) profit that could be generated by the Ports through to 2032, GBP76m could be returned to the States in the form of cash (comprising tax receipts and dividends) as well as continued Service Obligations," the consultation document states.

Last year, the two organizations undertook significant efforts to achieve operational cost savings worth GBP1m, against annual turnover of GBP43.7m. The government said that States support would continue for the provision of 'non-commercial' services, such as the Coastguard and the maintenance of outlying harbours. Other revenue-boosting may be considered necessary under the restructuring, with annual profits of 8% targeted. However, the government underscored that, in becoming a commercial entity, more funds will be available to enhance the service provided to users of facilities in Jersey, and for expansion.

Jersey Harbours manages two ports, as well as marinas and moorings for local boat-owners and visitors - from the “Five Gold Anchor” marinas in St. Helier to moorings in the outlying harbours. In 2011, the two ports handled the movement of 2.2 million passengers and 488,000 tonnes of freight and fuel. Plans to 2032 envisage no annual increase in terms of passenger volumes, but a 5% annual increase in freight volumes.

Plans for the restructuring are to go before the island's legislative assembly, the States of Jersey, in September 2012, with legislation to be approved by the end of the year.

TAGS: tax | marine | aviation | corporation tax | Jersey | offshore | legislation | dividends

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