Stores in £5m tax ‘escape’
Wednesday 18th February 2009, 3:00PM GMT.
TAX receipts could take a £5 million hit because of waning ministerial support for a rental charge to replace the tax that foreign non-finance firms will escape under company tax reforms.
Non-Jersey non-finance firms, such as UK shops, could still end up paying no tax here under income tax reforms if the States do not put in place a system for levying a charge on them based on rent.
At a Scrutiny hearing yesterday, Assistant Treasury Minister Eddie Noel said that he was not personally in favour of the Blampied proposal for a charge based on rent. He said that there could be a change in policy on the tax and that he was lobbying to get the ‘deemed rental charge’ withdrawn because, he said, it was too complicated and could simply drive up commercial rents.
Under the ‘zero-ten’ corporate income tax reforms which take effect from next year, foreign non-finance firms, including big retailers like Bhs and Boots, will pay no tax to the States. The locally owned Voisins department store will have to pay tax on profits here as personal income under ‘zero-ten’, but de Gruchy will not pay any tax here because it owned by the Ulster Stores Group. Instead, its tax will be paid in Northern Ireland.
• Picture: Voisins in King Street
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Could not raise GST in these shops to cover the lost in tax?
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13% GST in all non-Jersey non-finance firms
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not another bill for the man/woman in the street to mop up.
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Politically we are outside the EU, but in terms of both geography and trade we are part of the EU. Tax is paid in the country where company is established. Fair? Maybe not, but better than creative accounting.
Bhs, Boots and de Gruchy will have to pay tax, but not in Jersey. Locally owned Voisins may bleat but cannot claim that it’s rival have an unfair advantage as the rivals pay corporation tax in the UK are more onerous than the UK.
Wake up Jersey, there is a big world out there.
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Nothing has changed in the last 2000 years. The rich get richer and the others pay GST end so forth.
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Yeah three shares in my company two held in a jurisdiction outside jersey to avoid tax here.
Send the profits to another tax haven and bring em back via debit card and credit card.
Genius
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Mark – the difference is that non-Jersey owned Jersey businesses will be paying corporate tax – ie the company is liable for it and the shareholders only pay tax on any drawings / distributions – Jersey owned Jersey companies under the Deemed Distributed Law will have the shareholders personally liable for all the profits. This is a vast difference as personal tax is not only a higher rate but also means that the shareholders Social Security payments will soar. Once again, the Jersey people are being penalised as we have a government that looks after foreigners but squeezes the lifeblood from its own people. This will drive some Jersey businesses out of business as they are only just surviving under the present system.
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Thank you Nellie. I believe that we may be on common ground. My point was that Jersey is in the hypocritical position where some object to creative accounting for corporate ends, where the Jersey exchequer loses, whilst ensuring Jersey maintains its preeminent position as base for the ‘finance industry’ and individuals seek tax avoidance on personal liabilities to taxation in the EU.
Your comment “Once again, the Jersey people are being penalised as we have a government that looks after foreigners” is very true. If Jersey taxation was proportionate it would not be regressive, by which I mean GST. Our Chief Ministers argument for GST was required to make good lost taxation from the ‘finance industry’. This means that everybody has to pay their 3% on goods and purchase made in Jersey. Hence it follow the poor will have little option but pay 3% GST on a large element of their income as proportionately Jersey is where they spend their time. The rich can jet off and spend their money where they please knowing that the capital gains on their Jersey based investments are tax free.
GST in Jersey has been introduced to ensure the wealthy can maintain a largely tax exempt status. So yes some Jersey business may suffer to protect the Jersey ‘finance industry’. Maybe we should ditch GST in favour of: 1) a higher tax band for all the accountants who earn a mint; 2) a capital gains tax; 3) or both.
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I cant believe post number 7. So we lose a bit of tax revenue from operations over here. Sound something like our main line of finance industry business for the last 40 years.
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