In Budget 2018 the States Assembly agreed to apply a higher rate of tax to the profits of large corporate retailers with effect from the year of assessment 2018.
Large Corporate Retailers, Income Tax Law (Jersey)
Tests for large corporate retailers
To be a large corporate retailer a company will have met certain tests. The tests are applied to the financial period(s) which end in the year of assessment. These tests are considered for each year of assessment. Accordingly a company may be a large corporate retailer in one year whilst not a large corporate retailer in another year.
To be a large corporate retailer for any year, a company:
- must be resident, or have a permanent establishment, in Jersey
- must have a gross retail turnover of at least £2 million
- the Jersey retail turnover must be at least 60% of the company's turnover from trade carried on in Jersey
Year of assessment 2018
Companies which are within the scope of the tax on large corporate retailers will first become chargeable to tax on their profits for the financial period(s) ending in 2018. A company which has a financial period ending on (for example) 30 June 2018 will be chargeable to tax on the profits for the whole of that financial period for the year of assessment 2018.
Rate of tax
The amount of tax a large corporate retailer will ultimately pay will depend on the level of the company’s taxable profits. This is because the rate of tax applied to a large corporate retailer varies as the company’s taxable profits exceeds certain thresholds.
The maximum rate of tax applied to the taxable profits of a large corporate retailer is 20%. This rate is applied whereby profits chargeable to tax under schedule D are greater than £750,000.
Associated companies are defined as 'two or more companies, each with a retail turnover of 60% or more of the total amount derived from trade in Jersey, that are controlled by the same person'
Associated companies will become chargeable to tax if their cumulative Jersey retail turnover exceeds £2 million in a 12-month financial period.
Losses and capital allowances
Large corporate retailers are not entitled to claim relief for losses under Article 107 or Article 107A. Losses can be carried forward under Article 108 and offset against the profits arising from the same trade in the first subsequent assessment.
Large corporate retailers are included within the definition of 'qualifying companies' for the purposes of group relief. Both the surrendering and the claiming companies must be large corporate retailers for the loss to be surrendered.
Large corporate retailers are entitled to capital allowances for machinery or plant that is used wholly and exclusively for the purpose of the trade.
For further information, please see the guidance notes below.
Large corporate retailers guidance notes