JERSEY IS SET to keep its 0/10 corporate tax regime after a review by the EU, but will ditch its distributable profits anti-avoidance rule.
The Council of Ministers said that Jersey’s corporate tax regime, which taxes businesses at 0% and financial services firms at 10%, will stay in place.
A review had been undertaken by the EU Code of Conduct and a high-level working party into the tax regime, in particular with concerns over Jersey’s distribution and attribution rules.
Under these rules, Jersey shareholders in Jersey companies that failed to distribute more than 60% of its profits would be taxed as if they had distributed the profits.
The European Commission said the distribution rules gave rise to harmful effects, despite the rules not necessarily being a business tax.
Jersey will remove the rules from January 2012, subject to the agreement of its States Assembly. The Jersey Treasury estimates that the change will create a temporary cashflow issue, but will not reduce the total tax take.
Chief minister, senator Terry Le Sueur, told the States Assembly today (15 Feb): “This action allows us to retain our corporate tax regime while meeting the concerns of the EU.
“Maintaining tax neutrality in a simple and transparent way provides stability and certainty for businesses operating here and sends a clear signal that Jersey continues to provide a competitive tax system which will safeguard the island’s future economic well-being.”
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