The Jersey Evening Post, the ever reliable supporter of the Jersey government, reported yesterday that:
After months of discussion, EU finance ministers agreed this week on a blacklist of ‘non-cooperative' jurisdictions which comprises 17 territories around the world, including Bahrain, Barbados, South Korea, Macau, Panama and the United Arab Emirates.
More than 40 other jurisdictions were asked to reform their tax structures by next year, including Jersey and Guernsey, which has led to speculation that they have been placed on a ‘grey-list'.
A spokesman for Jersey's External Relations Department said, however, that such a list did not exist.
It is Jersey's claim that the only list that exists is of 17 jurisdictions, as noted here on Tuesday.
There is just one problem. As the Jersey government acknowledges, the EU listing:
provides an update on the 40-plus jurisdictions who have made commitments to meet certain concerns raised by the Code Group by the end of 2018. It is this annex which has erroneously been called a “grey-list”.
And as they also note, Jersey is on that list. As they report:
Chief Minister Ian Gorst has said that new legislation would be introduced in Jersey to meet the one area of concern raised by ECOFIN, which was whether companies registered here for tax purposes were carrying out ‘real economic activity' in the Island — known as an ‘economic substance' test.
In response Richard Murphy of Tax Research UK, a long -term critic of the Island's finance industry, wrote: ‘Come on Senator @Ian_Gorst: that fools no one. Jersey is on an EU grey list and you're going to have to make the most almighty tax reforms to get off it, including introducing a corporation tax at a sensible level.'
And they added that:
Writing in his blog, Mr Murphy said that the Crown Dependencies — Jersey, Guernsey and the Isle of Man — would fail the economic substance test at present because corporate profits make up a much higher percentage of their GDP than places like the UK.
‘The EU Code of Conduct Group test is failed by each of them: they do provide facilities that do encourage the artificial relocation of profits without the economic substance of the related transactions that give rise to that profit being located in the islands,' he wrote.
He added that he expected that the Crown Dependencies would need a ‘total reform' of their corporation tax systems to meet the EU's standards and could face ‘draconian' sanctions if they do not.
This time I cannot see the EU accepting that outcome. Jersey, and the other Crown Dependencies, are facing the most almighty tax shakeup, with the requirement that they comply before the UK leaves the EU (which cannot be a coincidence). And this time only a tax charge will keep Brussels happy.
I am amused. Senator Gorst has very little to smile about this festive season. Jersey is facing the most almighty upheaval, as are Guernsey, the Isle of Man, Cayman and Bermuda, with the BVI to be added to that list in due course, I suspect.
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I asked CM Gorst if he had seen this yet – he said no so perhaps you had better cc him….also here is a link to Jersey’s new Migration Plan.
Sad what has to be done when a place creates a totally artificial economy with a population that it cannot support.
http://www.statesassembly.gov.je/assemblyreports/2017/r.134-2017.pdf
It’s in the JEP
I don’t believe him
Thanks for this update Richard.
Will the new tax they are imposing (20% on all profits over £500,000) count for the purposes of the Code of Conduct or will the EU want further changes to be implemented?
My suspicion is they will demand a worldwide corporation tax
I am quite sure that the EU will have no option but to allow Jersey and the other Crown Dependencies to adopt a territorial tax system. There is nothing anywhere to prevent any country having a territorial tax system and several such systems already exist in the EU.
That’s fine – bit see what I will be writing soon
They (the finance industry and its various sycophantic coherts in Jersey and the Isle of Man) may have little to smile about …
But here at the PSG we are laughing …
Best Christmas present for years!
More nonsense.
As if they can force all these offshore territories to set a Corporation Tax Rate like you claim, and all on a level playing field. They will end up telling the EU to do one.
That’s why they have agreed to cooperate, is it?
As long as the outcome is level playing field Richard.
They haven’t turned around and said we’ll jump as high as you instruct us to.
A level playing field requires massive reform from the CDs