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Amendment to zero ten proposed

17 May 2011

The Treasury Minister, supported by the Council of Ministers, is announcing his intention to repeal those elements of Jersey’s corporate tax regime which were deemed harmful by the EU Code of Conduct Group. 

A proposal has been lodged to remove the deemed distribution and attribution rules with effect from January 2012. This means that “Zero ten”, whereby most companies pay tax at 0%, will remain.  

Jersey’s business tax regime has recently been subject to assessment by the EU Code of Conduct on Business Taxation Group (“the Code Group”). Throughout the formal assessment it was clear that the concerns of the Code Group focused on the interaction of the deemed distribution and attribution provisions with the 0% general rate of tax that applies to Jersey resident companies. 

This view was supported by the findings of a review by the EU Council’s High Level Working Party on Tax Matters into the scope of the EU Code of Conduct on Business Taxation (“the Code”) in January 2011.

The Treasury Minister, Senator Philip Ozouf said “We are confident that the evidence shows this positive action will result in Jersey’s 0/10 tax regime being considered fully compliant with the Code. 

"We can then keep our existing corporate tax regime while also meeting the concerns of the EU.

“Maintaining tax neutrality provides stability and certainty for businesses operating here and sends a clear signal that Jersey continues to provide a competitive tax system which will safeguard the island’s future economic well-being.”

Treasury forecasts estimate this change will create a temporary cash flow effect from 2013/2014, which is not expected to be more than £10m in any one year. The repeal of the provisions is not expected to cause a reduction in the total tax take.

The EU Code of Conduct Group will formally consider the decision to remove the deemed distribution and attribution provisions later this year. 

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