Zero / ten – there was no Treasury press release

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There has been much demand or the original of the HM Treasury press release on zero / ten.

There was no such press release. Just this, which has now reached me:

From: "Clark, Jez" <Jez.Clark@hmtreasury.gsi.gov.uk>
Date: Tue, 7 Dec 2010 14:17:36 -0000
To: <newseditor@guernsey-press.com>
Conversation: [UNCLASSIFIED] ECOFIN
Subject: [UNCLASSIFIED] ECOFIN
Nick,
As discussed, below is some background on the process in the run up to today’s ECOFIN and the UK Government’s stance:

On 23 September, the Code of Conduct for Business Taxation Group discussed Jersey’s Zero-Ten Corporate Tax Regime and the Isle of Man’s New Tax Legislation. After an exchange of views with those concerned (Jersey and IoM reps attended the Code to make an opening statement and answer questions), the Code Group invited the EU Commission to prepare draft evaluations for the next Code meeting on 19 November.

The EU Commission’s evaluation focused on the operation of the zero/ten regimes as a whole, not merely the deemed distribution and attribution provisions in isolation. The EU Commission considered that taken as a whole, the systems were designed to offer a 0% tax rate to foreign investors (although some sectors are not taxed at the 0% rate), whilst avoiding residents benefitting from the 0% tax rate.

Following a discussion of the Commission’s evaluation, the Group agreed that Jersey’s Zero-Ten Corporate Tax Regime and the Isle of Man’s New Tax Legislation give rise to harmful effects. This was duly noted by ECOFIN.

Under the terms of the Code of Conduct for Business Taxation, the UK is committed, within its constitutional arrangements, to ensuring that the principles of the Code are applied in its dependent and overseas territories.

Both Jersey and the Isle of Man made voluntary commitments to abide by the Code in 2002. The Government expects Jersey and the Isle of Man to abide by those commitments and implement the abolition of the harmful measures. We are ready to offer support to Jersey and the Isle of Man in implementing the changes necessary.

Although Guernsey operates a Zero-Ten Corporate Tax regime similar to those operated by Jersey and the Isle of Man, its regime is not being assessed as Guernsey was deemed by the Group to have made a strong enough public commitment to move away from its current regime. The UK is supportive of Guernsey's efforts to move towards a normal, internationally acceptable business tax regime.

Hope this is useful, but do give me a call on the below if you need anything further. Would also be grateful if you could let me know what you write up from today’s events.

Thanks,

Jez.

Jez Clark | Press Officer to the Economic Secretary | HM Treasury | 1 Horse Guards Road | London | SW1A 2HQ | 020 7270 6260

I think that’s pretty clear.

I’d stress this point:

Under the terms of the Code of Conduct for Business Taxation, the UK is committed, within its constitutional arrangements, to ensuring that the principles of the Code are applied in its dependent and overseas territories.

In other words, it’s not up to you Mr Ozouf.

You may not like that, but the difficulty is you’re just a part of the UK and you have to do what you’re told. That’s the reality. You might bluster, but you have no choice if, as seems certain, the UK has decided to impose this decision which has been made.

But see the next post too.