RUDL Granting of licences and operation of fulfilment companies in the Island

1240/5(2567)

WRITTEN QUESTION TO THE PRESIDENT OF THE ECONOMIC DEVELOPMENT COMMITTEE BY DEPUTY G.P. SOUTHERN OF ST. HELIER

ANSWER TO BE TABLED ON TUESDAY, 21st JUNE 2005

Question

Will the President inform members –

1. how manynew fulfilment companies with non-locally qualified orresident principals the Committee has granted a licence to under the Regulation ofUndertakingsandDevelopment(Jersey)Law 1973, as amended, and whenthose licences were granted?
2. on whatgrounds the Committee considered the grantingof such licences to bein the best interests of the Island, and, in particular, whatwas the anticipated total return to the Island intermsof tax revenue from these companies?
3. whether the Committee considered the effects on this projected tax revenue whenthe zero/ten proposals come into force, and if so, what that consideration concluded?
4. what consideration, if any, did the Committee give to the possibility that the United Kingdomgovernment might take action to prevent such tax-avoidancemoveson the part of United Kingdomcompanies?
5. what consultation, if any, hastaken place with the Policy andResourcesCommittee on theissue referred to in (d) above over this period, and does the Committee concurwiththeposition expressed by the Policy and ResourcesCommitteetoopposeexpansionofJerseyPosttonew premises in orderto support such schemes?
6. what bearing, if any, will the position expressed by the Policy and Resources Committee have on the implication for future policy outlinedon page 19 of the EconomicGrowth Plan to "maximise productivity growth in every sector from financial services to retail to tourism to agriculture to fulfilment"?

Answer

1. Since the CommitteewasformedinDecember2002,two licences have been granted for the commencement of fulfilment undertakings, the principals ofwhichwerenon-locally qualified or non-resident –

( i)  one licence in 2003 on the basis of the success of this diversified industry and the potential benefit to the

economy;

( ii ) one licence in 2004 where, although the principal was non-locally resident, the only member of staff was

to be locally qualified. In the event, it appears that the undertaking did not actually commence and the manpower return for December 2004 showed that no staff were engaged and that the undertaking has ceased;

2. the groundsfor granting the licences are provided in the answertoquestion (a). Given that, in reality, there was only one such licence, it wouldnotbeappropriate to disclose the anticipated tax return as it wouldbe easy to identify the company in question and this would be tantamount to disclosing commercially confidential information.Of course, the Committee, in taking such decisions,hasto base its judgementon the balancebetween potential tax revenueandemployment opportunities for locals;
3. the Committee did not considerthe 0/10 tax issue in 2003.In 2004, the Committeewasawareofthe implications;
4. in relation to the two licences, the Committee did not consider that the United Kingdomgovernmentwould take such action because the applications did not involve high-profileU.K.companies;

5. the Committee has consulted fully with the PolicyandResourcesCommittee on the issue referred to in (d). The issueconcerningpremises used by Jersey Post is currently under consideration;
6. the Committee is working closely with the Policy andResourcesCommittee and the Finance and Economics Committee in establishing an agreed policy towardsthe fulfilment industryas part of the EconomicGrowth Plan.