Waterfront Enterprise Board Tax Status.

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A decision made (19/10/2007) regarding: Waterfront Enterprise Board Tax Status.

Decision Reference: MD-TR-2007-0108
Decision Summary Title:	Waterfront Enterprise Board Tax Status		Date of Decision Summary:	19th October 2007
Decision Summary Author:	Malcolm Campbell – Comptroller of Income Tax		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	Malcolm Campbell – Comptroller of Income Tax
Written Report Title:	Article 115 Income Tax (Jersey) Law, 1961 – Waterfront Enterprise Board Amendment		Date of Written Report:	16th October 2007
Written Report Author:	Malcolm Campbell – Comptroller of Income Tax		Written Report : Public or Exempt?	Public
Subject: Article 115 Income Tax (Jersey) Law, 1961 – Waterfront Enterprise Board Amendment.
Decision(s): The Minister decided to exempt the Waterfront Enterprise Board (WEB) and its associated enterprise under Article 115 of Income Tax (Jersey) Law 1961 to extend to the profits generated insofar as the profits are expended wholly and exclusively to improve and extend public infrastructure and works for the good of the public of the Island.
Reason(s) for Decision: Article 115 contains the miscellaneous exemptions from tax in the Income Tax (Jersey) Law, 1961, as amended. There are numerous reasons why exemption from tax is considered appropriate. For example, exemption is given to the income of a trust, corporation or association established in Jersey for a charitable purpose. Exemption is also given to any income derived by the States from their own property under article 115(c), as it would be somewhat inappropriate for the Sates to pay the Comptroller of Income Tax the tax due on its income when all the Comptroller then does is remit the tax straight back to the Treasury. It is intended that as WEB is wholly owned by the States it should be treated similarly.
Resource Implications: None
Action required: Request the Comptroller of Income Tax to instruct the Law Draftsman accordingly.
Signature:		Position: Senator Terry Le Sueur, Treasury and Resources Minister
Date Signed: 22nd October 2007		Date of Decision: 19th October 2007

Waterfront Enterprise Board Tax Status.

ARTICLE 115 – WATERFRONT ENTERPRISE BOARD AMENDMENT

Purpose of the Report

The Purpose of this report is to explain the provisions of article 115 and why it would be appropriate to include an exemption from tax for the profits of the Waterfront Enterprise Board (WEB) and it’s related entities, insofar as the profits in question are expended wholly and exclusively to improve and extend public infrastructure and works for the good of the public of the Island.

Background

2.1 Article 115 contains the miscellaneous exemptions from tax in the Income Tax (Jersey) Law, 1961, as amended. There are numerous reasons why exemption from tax is considered appropriate. For example, exemption is given to the income of a trust, corporation or association established in Jersey for a charitable purpose under Article 115(a). This ensures that the charity gets the full benefit of its income for expending on charitable purposes rather than having to pay tax on its income, which would deplete its financial resources to the extent of the tax bill. Exemption is also given to any income derived by the States from their own property under Article 115(c), as it would be somewhat inappropriate for the States to pay the Comptroller of Income Tax the tax due on its income when all the Comptroller then does is remit the tax straight back to the Treasury.

Comments

3.1 It is understood that WEB and its associated entities are wholly and completely owned by the States. If that is indeed the case, it might be possible to exempt all its income under Article 115(c). However, to place the matter beyond doubt, especially as WEB and its associated entities are multi-million pound dealers in land, it might be best to make a specific amendment to Article 115.

3.2 The exemption for WEB and its associated enterprises under Article 115 will only extend to the profits generated insofar as the profits are expended wholly and exclusively to improve and extend public infrastructure and works for the good of the public of the Island. If any profits are not expended for that specific purpose, these particular profits will not be exempt from tax.

3.3 It will not be possible to include the necessary changes to the Income Tax (Jersey) Law in this year’s Budget, as all these papers have now been finalised. However, should the Minister approve the recommendation in this paper the Comptroller will be prepared, until Article 115 is amended to allow specific formal statutory exemption from tax for WEB on its relevant profits, to grant confessional exemption on the basis of Article 115(c ), whereby any income derived by the States from their own property is currently given statutory exemption from tax.

RECOMMENDATION

4.1 That the Minister approves the Comptroller instructing the Law Draftsman accordingly.

INCOME TAX – 19 October, 2007