The introduction of this new sub paragraph to Article 123D, which defines financial services companies and hence those taxable at the 10% rate, brought new companies conducting certain activities within the definition of a 'finance services company'.
The policy intention behind this change was to ‘level the playing field’ between banks that are taxable at 10%, and those companies that offer loans and other types of credit, in competition with the banks, but that were only subject to the 0% rate at the time.
Whilst Revenue Jersey is confident that the definition captures those companies it was intended to, there has been concern raised that it is causing uncertainty, particularly for certain international financing structures which utilise Jersey companies, where there have been queries raised as to whether they might fall within a strict interpretation of the letter of the present definition.
Revenue Jersey has not sought to go beyond the scope of the underlying policy intention, which was to ensure that where a business might be competing for custom with banks (see note 1) located and operating in Jersey, then the tax system did not provide a competitive advantage.
Revenue Jersey would therefore clarify that in applying the definition in Article 123D(4)(e), it will seek to apply the Article only where the company is trading in the provision of credit facilities offered in some way into the Jersey domestic finance market.
In particular those companies offering credit facilities will not be in scope where the credit facilities are not offered (see note 2) to:
- individuals residing in Jersey, or
- businesses operating in Jersey, which will be determined as those holding a business licence (or non-resident traders licence) under the Control of Housing and Work (Jersey) Law 2012, or
- finance the acquisition or enhancement of immovable property located in Jersey
Revenue Jersey will recommend that, for the avoidance of doubt, a legislative change is made to ensure that this approach is clear in statute.
Notes
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Note 1
| All the banks in question are caught by Article 123D(4)(b).
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Note 2
| Subsequent changes of residence etc by customers would not affect their position at the time credit was offered.
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