Jersey there is no capital gains tax, capital transfer
tax or purchase tax. The
States agreed to introduce a broad-based, 3% Goods and
Services Tax (GST) in 2008, with a registration threshold
set at GBP300,000 of taxable turnover. This
rate increased to 5% from June 1, 2011. The only significant
other tax is income tax which is levied on the permanent
establishments of persons or 'bodies of persons' which
expression includes companies. There are some administrative
charges in addition. There are stamp duties on the transfer
of immovable property (up to 5%) and individual parishes
levy property taxes.
tax system for companies has applied from 2009. This
was achieved by introducing a standard rate of corporate
income tax of 0% and a special rate of 10% for specified
financial services companies into the Island’s
existing schedular tax system. Utility companies, rental
income and property development profits continue
to be charged at the standard rate of income tax of
20%. See Offshore
Legal and Tax Regimes for further details of financial
services company taxation.
companies resident for tax purposes in Jersey prior
to June 3, 2008, switched to a tax rate of either 0%
or 10% for the year of assessment 2009 onwards. However,
a company that became resident for tax purposes in the
Island on or after June 3, 2008, was taxed at either
a 0% or a 10% rate immediately. Companies have been
unable to elect for exempt company status from this
establishment, in relation to a company, includes a
branch of the company, a factory, shop, workshop, quarry
or a building site, and a place of management of the
company, but the fact that the directors of a company
regularly meet in Jersey will not, of itself, make their
meeting place a permanent establishment. For the avoidance
of doubt, it is the Comptroller’s view that clerical
functions, such as invoicing operations; and management
and administration services; and the entering into of
contracts in respect of a company’s international
business (to include, for example, swap financing and
loan funding agreements) at the address of the company’s
registered office will not amount to the carrying on
of a trade through a permanent establishment in the
Island. All the profits of such entities are taxed.
Taxable profits are determined under normal and existing
tax law and principles.
provisions for relief for groups of qualifying financial
services companies have been introduced. A company in
a group that suffers a loss can surrender that loss
to be offset against the profits or gains of another
company in the same group. The loss can only be offset
against profits or gains determined for a financial
period that is the same as, or overlaps with, the financial
period for which the loss arises. If a company’s
financial period is more than a year, the profits or
gains, or losses, for that period must be apportioned
and only so much of the profits or gains, or losses,
as are attributable to a 12 month period may be taken
into account. A qualifying company for these purposes
means a financial services company that is taxed at
10%, or a ‘grandfathered’ international
business company that is taxed at 10% or more. The claim
for relief must be made within 1 year following the
year of assessment in which the financial period for
which the surrendering company suffered the loss ended.
taxed at 0% and which are part of a group are also allowed
to pass on losses so as to offset the profits of another
company in the group. Although the companies are themselves
taxed at a 0% rate, group relief will benefit the Jersey
resident shareholders of the owners of the shares in
the company whose profits are reduced, as these shareholders
will be liable to tax in their personal assessments
on actual and deemed distributions from such a company.
is also phasing out income tax allowances for those
on higher incomes (20% Means 20%) over a five-year period
which began in 2007. Tax exemptions and allowances were
frozen for year of assessment 2006. At the same time
a revised Income Support system is being used to provide
some protection to those on low incomes. Further research
has also been undertaken into Environmental Taxes, Development
Levies and a Land Value Tax to see whether they might
be appropriate for Jersey.
2010 budget, announced in December 2009, contained some
environmental initiatives, including the planned introduction
of a Vehicle Emissions Duty in September 2010. Alongside
a proposed increase of GBP0.03 on petrol and diesel
duties, the VED will provide GBP2 million for environmental
long-awaited Land Transaction Tax (LTT) was also introduced
in 2010, on January 1. The LTT is a tax on share transfer
transactions is equivalent to stamp duty on freehold
property. Anyone who buys property by share transfer
is legally obliged to pay a tax exactly equal to the
amount of stamp duty that would have been paid had the
property been freehold.
LTT has been introduced to create fairness between the
costs of buying freehold property and the costs of buying
share transfer property. Previously share transfer did
not attract any form of property tax.
Future of the Zero/Ten Tax Regime
0/10 corporate tax regime may prove to be short-lived
due to concerns expressed by the EU that it does not
adhere to the 'spirit' of the Code of Conduct on Business
Taxation. In common with Guernsey and the Isle of Man,
the Jersey government has announced a comprehensive
review of the its fiscal strategy, with a view to introducing
further changes to the tax regime.
years ago we made significant changes to our tax system
to keep our island competitive and to maintain the high
quality public services and way of life we are all used
to,” Phillip Ozouf, Jersey’s Treasury Minister,
explained in the 2010 budget announcement in December
2009. He continued:
early decision to move to a 0/10 corporate tax structure,
introduce GST, 20 means 20 and ITIS may have been unpopular,
but was undoubtedly right.”
policies have provided certainty, encouraged investment
and supported high levels of economic growth. We all
benefit from the strong position Jersey has maintained.
Responsible governments however always keep their fiscal
strategies under review, not only to ensure they meet
changing international standards, but above all to ensure
they remain appropriate and competitive.”
light of the global financial crisis, which is prompting
most countries to review their tax structures, we too
need a Fiscal Strategy Review - not only because of
the structural deficit but also because of the need
to plan for the costs of an ageing population, infrastructure
renewal and growing health demands."
FSR will review all taxes and charges including personal
income tax, GST, duties and, importantly, our social
security contributions. Any tax options coming out of
the review will be assessed for efficiency, competitiveness,
who pays, fairness, the cost of collection and revenue
stability. Islanders will be consulted on the options
and their responses will help formulate any proposals
I am not going to rule anything in or anything out,
and I believe that our success has been built on low
taxes and high economic growth, members must appreciate
that in trying to generate as much revenue as possible
from export services, and particularly financial services,
we must remain internationally competitive and protect
key part of the FSR is a review of business taxation.
This was always intended to be part of the Review but
clearly recent events have increased our focus on this
area. I am conscious that recent press speculation has
created uncertainty in the finance industry and it is
important that I respond to this."
emphasized, however, that the 0/10 regime has not been
found to be non-compliant with the EU Code of Conduct
on Business Taxation.
do however understand that certain EU Member States
have questioned whether 0/10 could be interpreted as
being outside the ‘spirit’ of the Code,”
he continued, adding:
international tax world is changing. Jersey is already
committed to the tax ‘norms’ of non-discrimination,
which is why we introduced 0/10. However, we must be
alert to this and understand the concerns that have
will look for other precedents from established international
and European tax codes, not only to ensure compliance
with international standards, but also to ensure a level
playing field for Jersey’s businesses, trust and
to Ozouf, the findings of the review, to be carried
out during 2010, will be finalised in time for inclusion
in the 2011 budget.
pre-Zero/Ten Tax Regime
following information describes Jersey's corporate
tax regime prior to the introduction of the 'zero/ten'
reforms in 2009.
Scope of Income Tax
Jersey income tax is based on the Income Tax (Jersey)
Law 1961 as amended by subsequent Finance Laws
and Income Tax (Amendment) Laws. Until 1989, corporation
tax was payable by limited liability companies
registered in but not managed and controlled from
Jersey. Such companies were still liable to Jersey
income tax on income from Jersey sources (except
Jersey bank deposit interest, by concession).
The tax was abolished from the beginning of 1989,
when exempt companies were introduced. Income
tax is now payable by all limited companies, as
'income tax' companies pay full income tax
on their world-wide income
Business Companies pay full income tax on
their income arising in Jersey (see Offshore
Legal and Tax Regimes for the treatment
of non-Jersey income)
companies pay full income tax on their income
arising from an established place of business
in Jersey (see Offshore
Legal and Tax Regimes for the treatment
of other income)
branches of foreign corporations pay full
income tax on income arising in Jersey if
they are managed and controlled outside the
island; otherwise it is treated as a Jersey
resident 'income tax' company.
The 0/10% tax regime applies as from
Income Tax Rates
The rate of Jersey corporate income tax is 20%; but
for International Business Companies' Jersey income
the rate is a maximum of 30%.
0/10% tax regime applies as from 2009.
Calculation of Taxable Base
For companies, income tax is normally assessed for income
arising in the calendar year (the Year of Assessment).
Income is defined fairly comprehensively.
expenditure needs to be incurred 'wholly and exclusively'
for the business; however, mixed private/company expenses
can often be apportioned.
is a system of capital allowances whereby capital expenditure
is pooled and 25% of unamortised capital expense is
charged off against income in each year. The rules are
reasonably complex. There are special rules for glasshouses
(important in Jersey).
to some conditions, losses may be carried forward; there
are no provisions for terminal loss relief. There is
no group relief for company losses, but it is often
possible to adjust an intra-group situation by making
inter-company management charges, provided all companies
paid at source on foreign investment income can be deducted
from that income.
0/10% tax regime applies as from 2009.
Taxation of Trusts
the normal trust situation, ie with settlor, life tenants
and beneficiaries all being non-resident, full exemption
from Jersey taxation is given to foreign income and
Jersey bank interest, by concession. This exemption
is automatic, and does not need to be applied for.
if any of the settlor, the life tenants or the beneficiaries
are Jersey-resident, the tax picture becomes more
complex, and exemption from Jersey tax will be partial,
at best; however if only the settlor is Jersey-resident,
full exemption may be available on application to
the Comptroller, subject to stringent conditions.
If tax is due on a Jersey trust, then it is assessed
on the trustee; a non-resident trustee will however
be assessed only on income arising in Jersey.
Unit trusts are treated in the same way as other trusts;
the existence of Jersey unit-holders does not affect
exemption, subject to some conditions.
0/10% tax regime applies as from 2009.