Proposal to introduce a new fiscal policy and tax exempt companies in Jersey

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QUESTION TO BE ASKED OF THE PRESIDENT OF THE FINANCE AND ECONOMICS COMMITTEE ON TUESDAY 16th MARCH 2004, BY SENATOR P.V.F LE CLAIRE

Question

Given the proposals to introduce a new fiscal policy which relate to the possible implications arising from the adoption of measures outlined in the Code of Conduct group findings which examined potentially harmful tax measures in EU member States, would the President inform members –

( a ) how many exempt companies there are in Jersey, how their taxes are calculated and on the basis of

income from which sources (e.g. Jersey source income), and the tax collected last year in total from these companies?

( b ) the amount of monies held on deposit in Jersey by exempt companies, and, if unknown, the reasons

why?

( c ) how many international treasury operations there are in Jersey, how their taxes are calculated and on the

basis of income from which sources, and the tax collected last year in total from these companies?

( d ) the amount of monies held on deposit in Jersey by international treasury operations, and, if unknown, the

reasons why?

( e ) how many international business companies there are in Jersey, how their taxes are calculated and on the

basis of income from which sources, and the tax collected last year in total from these companies?

( f )  the amount of monies held on deposit in Jersey by international business companies, and, if unknown,

the reasons why?

( g ) how many captive insurance companies there are in Jersey, how their taxes are calculated and on the

basis of income from which sources, and the tax collected last year in total from these companies?

( h ) the amount of monies held on deposit in Jersey by captive insurance companies, and, if unknown, the

reasons why? and,

( i)  an approximation of the numbers of people employed in Jersey directly with the previously mentioned

companies and financial services?

Answer

I shall reply to the questions in the order that they have been asked, as follows –

1. there are approximately 17,700exemptcompaniesin Jersey. Anexemptcompany pays a charge of £600 per annum. It does notpayincome tax on profits orincome arising outside Jersey. Inthecaseofincome arising in Jersey, apart from bank interestwhichisexempt in accordancewith the usualconcession, the exempt companyis liable toincome tax at the standard rateof20%,asare the profits of a trade carried on through an established place of business in Jersey. In 2003, the sum of £10.6 million was collected from exempt companies.Exemptcompanies are at the heart of Jersey's finance industry and are instrumental in providing many ofthe products andserviceswithin that industry;
2. this information is not available and would beimpossible to collect as it is a private matterbetween the beneficial owner of the exemptcompany and its bankers and advisers;
3. unlike exemptcompanies and international businesscompanies,which have theirown specific and generic data base on the Income Tax Officecomputer system, international treasury operations donot,soproviding

an accurate answer to this question is not possible. In general terms, international treasury operations book inter-

company and other loans through Jersey, an activity which can, of course, quite easily be shifted to other competing jurisdictions. In the past, before the introduction of the international business company facility, some specific treasury operations benefited from the treatment of certain allowable costs but this is no longer the case;

4. this information is not available forthesamereason as given at (b);
5. there are currently 184 international businesscompaniesin Jersey. International business profits aretaxedas follows –

fi rs t £ 3 million at 2%

n ext £1.5 million at 1.5% n ex t  £ 5.5 million at 1%

 r e mainder at 0.5%.

I t is also possible for an international business company to agree a rate of tax on international profits with the

Comptroller of Income Tax at a higher rate than 2%. Income or profits other than those arising from international activities are taxed at the rate of 30%. The total tax collected last year from international business companies amounted to £52 million;

6. this information is not available forthesamereasonsas given at (b);
7. a captive insurance company is able to take advantageof either exemptcompany status or international businesscompany status and there are currently 9 captive insurancecompanies in Jersey. In 2003, the sumof £154,000was collected from these companies;
8. this information is not available forthesamereasonsas given at (b);
9. some 12,900 people, whichis approximately 28% of the total workforce,wereemployed in financialand legal services in 2002. It is notpossible to give anapproximationof the numbersofpeople employed in Jersey directly with the previously mentioned companies. Furthermore, not all international business companiesare involved intheprovisionof financial services.