DECISION AND REASON FOR THE DECISION:
Following a screening process undertaken by the EU’s Code of Conduct Group (Business Taxation) (“COCG”), the COCG expressed concerns about Jersey’s possible compliance with the criteria regarding a “legal substance requirement for entities doing business in or through the jurisdiction”. In response, Jersey made a political commitment to address these concerns by the end of December 2018.
The Government of Jersey has been working closely with the governments of the Isle of Man and Guernsey to collectively develop proposals to address the concerns raised by the COCG regarding economic substance. This work has included dialogue with the European Commission and the COCG both in plenary sessions and bilateral meetings. Discussions have also taken place with individual EU Member States (this work being co-ordinated by the Channel Islands Brussels Office) and with the OECD Global Forum and the FHTP.
In August 2018 a consultation document was issued entitled “Consultation on the introduction of substance requirements for companies tax resident in Jersey”, which summarised Jersey’s outline proposal regarding the introduction of substance requirements and sought feedback from interested parties.
Following the conclusion of the consultation, draft legislation was prepared (the Taxation (Companies– Economic Substance) (Jersey) Law 201-) and provided to the COCG, in order for the content of that draft legislation to be considered at meeting of the COCG in September and October 2018.
Having considered the feedback from the COCG, the Minister has lodged the legislation so that it can be debated in the States sitting which commences on 4 December 2018.