Jersey's Zero 10 corporate tax regime has been given the
go-ahead by EU officials.
Last year, experts at the European Union told the island that
parts of their corporate tax regime were harmful.
At a meeting on 13th September the EU Code of Conduct Group said
they accepted moves made by Jersey to remove the deemed
distribution and attribution elements of the 'zero-ten' regime -
elements they had deemed harmful - in order to fully satisfy the
Code's criteria.
Jersey's Chief minister, Senator Terry Le Sueur said: "Following
the ongoing Review of our Business Tax Regime, the Treasury
Minister proposed, and the States then agreed, legislative
amendments which aimed to remove elements of our legislation that
were considered harmful by the Code Group.
"At its recent meeting, which was attended by Jersey officials,
I am pleased to report the Code of Conduct Group accepted that our
rollback proposal would remove the harmfulness of our regime. This
has to be ratified by ECOFIN in December at the end of the Polish
Presidency."
The original rules assumed that shareholders would be given a
dividend each year of 60% of the profits of their company. The
States then taxed shareholders on that assumed 60% payout.
But some shareholders received far less than that assumed
amount, yet still had to pay the tax on the higher figure and so
ended up paying more in tax than necessary.
This so-called deemed distribution was said to be harmful,
especially as foreign shareholders were taxed on the dividend they
actually received not an assumed amount.
From now on, shareholders will only be taxed on the profits they
actually receive.
Geoff Cook, chief executive, Jersey Finance, said:
"We have maintained throughout that zero-ten remains a viable,
strong tax regime for Jersey and its finance industry, that is
easily understood by service providers and their clients and at the
same time ensuring Jersey offers stability and remains competitive
with other jurisdictions. The Code Group's decision will give
finance firms even greater confidence in Jersey as a solid, robust
and attractive centre in which to do business."
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