{"id":39804,"date":"2017-12-18T06:56:06","date_gmt":"2017-12-18T06:56:06","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=39804"},"modified":"2017-12-18T10:55:09","modified_gmt":"2017-12-18T10:55:09","slug":"jerseys-days-as-a-tax-haven-are-very-definitely-numbered","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2017\/12\/18\/jerseys-days-as-a-tax-haven-are-very-definitely-numbered\/","title":{"rendered":"Jersey’s days as a tax haven are very definitely numbered"},"content":{"rendered":"

The EU's new tax haven black list\u00a0<\/a>published last week, had, as I've noted before<\/a>, an interesting ' grey list'\u00a0 attached to it.\u00a0 Included in the grey list were\u00a0 the UK's Crown Dependencies and some of its Overseas Territories as a result of this comment:<\/p>\n

\"\"<\/a><\/p>\n

I have already offered some detailed commentary<\/a> on the consequences, but this blog elaborates those concerns, with evidential support. That\u00a0 evidence comes from Jersey as a consequence of questions asked\u00a0 of the Chief Minister of Island by\u00a0 States of Jersey Deputy Geoff Southern,\u00a0 quite coincidentally,\u00a0 in September and December this year.<\/p>\n

This blog is in four parts. The first assembles the data from the questions Geoff Southern asked. The second assesses that data and suggests its consequences. In the third part I lay out some of the challenges this gives rise to. Fourthly, I suggest the questions that Jersey needs to address now. Finally I suggest what this might mean for the Island.<\/p>\n

It is my belief that very similar questions could be asked of all the other jurisdictions noted in the grey list. I would add that because that is my belief I will be sharing this blog post with the Director General for Taxation and the Customs Union in the European Union.<\/p>\n

Because the issue I am discussing is of such significance I make no apology for the length of this post. The challenge that the EU has put to the Crown Dependencies and Overseas Territories is significant: an evidence based approach to addressing it is required and this blog starts to set out a way in which this might be done.<\/p>\n

The facts<\/strong><\/p>\n

Geoff Southern's main question of interest<\/a> was raised in December 2017\u00a0 (number 632), after the release of the EU black list, and asked:<\/p>\n

\"\"<\/a><\/p>\n

The purpose of his question was,\u00a0 I think, to discover whether the conditions that had eventually led to Jersey having its tax system approved by the EU Code of Conduct Group<\/a> on Business Taxation still persist. This is implicit in the first part of the question. The answer was about as vague as could be:<\/p>\n

\"\"<\/a><\/p>\n

Much of the answer to the second part of the question appeared to be \u00a0obfuscation until this was said:<\/p>\n

\"\"<\/a><\/p>\n

Part three to the answer also provided little in the way of clarity :<\/p>\n

\"\"Whilst in conclusion the answer said:<\/p>\n

\"\"<\/a><\/p>\n

Which is tantamount to an admission that nothing at all is known about the 11,000 foreign companies managed in the Island right now.<\/p>\n

It is fair to say that the information \u00a0provided is not a model of clarity.\u00a0Written question 504<\/a>\u00a0from September 2017 adds some elaboration:<\/p>\n

\"\"<\/a><\/p>\n

These companies apparently paid this tax:<\/p>\n

\"\"<\/a><\/p>\n

And it was reported that:<\/p>\n

\"\"<\/a><\/p>\n

Assessment of the available data<\/strong><\/p>\n

It is important to note that the EU Code of Conduct relates to business taxation<\/a>, which is\u00a0 interpreted as meaning tax on company profits.\u00a0 That is why\u00a0 company data is critical to the issues being addressed to.<\/p>\n

What the Code said in 1997 was that:<\/p>\n

\"\"<\/a><\/p>\n

That I am aware of this still remains true. As assessment criteria go they're useful.<\/p>\n

The information provided in December suggests that:<\/p>\n

    \n
  1. \u00a0There are, apparently, 45,000 companies that are resident in Jersey;<\/li>\n
  2. \u00a0Of these companies appeoximately 34,000 are incorporated in the Island and 11,000 are resident but incorporated elsewhere;<\/li>\n
  3. \u00a0The States of Jersey only hold data on the trading of 6,000 of these companies. That is 13.4% of the total.<\/li>\n
  4. No information is requested on foreign owned companies with permanent establishments in the Island and so the nature of their activities is for all practical purposes unknown to the Island.<\/li>\n<\/ol>\n

    The September data adds the following perspectives:<\/p>\n

      \n
    1. Of these companies just 4,100 may be trading. This is 9.2% of the total. 90.8% of companies do therefore fall outside the tax system it seems, although evidence to prove that this is correct is not available in 86.6% of cases: the Island takes it on trust that this is true.<\/li>\n
    2. Tax paid is settled by a maximum of 1,250 companies, and it may be very much less than this as that total includes all companies in the construction sector, many of which are likely to be untaxed in practice under Jersey law.<\/li>\n<\/ol>\n

      This data implies that:<\/p>\n