Confusion over Europe’s view of Zero Ten
Wednesday 24th November 2010, 2:59PM GMT.
Treasury Minister Philip Ozouf.
EUROPEAN finance officials have raised no major concerns about Jersey’s zero-ten corporate tax rate, the Treasury Minister has said.
Senator Philip Ozouf added that the code of conduct group in Brussels, which met last week to decide whether the policy was ‘harmful’, had only commented on a minor aspect of it.
In effect, he said that no news was good news and insisted that his interpretation of the situation was correct.
Critics of the zero-ten policy, including Jersey Democratic Alliance president and former Senator Ted Vibert, have said that the group deemed the policy harmful on three significant grounds.
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I always thought Jersey had a right to fix its own taxes? And another thing, whats the JDA’s alternate corporate tax model anyway seeing as Ted Vibert is the new ‘expert’?
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Why do I get the feeling we are not being told the whole story here….
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Here we go again, because there is no major problems, truthseeker automaticaly goes to default position that there must be a conspiracy ooooo…. ahhhh… conspiracy…
Get over it – the EU have said there are some minor changes required, but nothing substantial.
So all the left-wing rabid closet vocal minority are now going to look for somethign untoward.
IF ever there was an example of a ridiculous statement, it is truthseeker above who intimates a conspiracy even before the news has come out.
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well that differs from what I hsve read !!!
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Put in plain speak; ‘They don’t like our tax avoidance regime’.
It has been said that the new owners of RBS International closed the tax avoidance section down, hence redundancies in the Jersey finance industry. Expect more of the same.
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Inform us what the “minor aspect” is and then all is transparent.
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The code of conduct group are not the ones that make the decision.
They will report to Ecofin who will make the decision.
So there is absolutely nothing decided yet.
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(3) Watch the news.
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Well personally i have no confusion over this debacle of zero-ten …. its costing me and all of us a load of money! Im sick of big non-Jersey based business and the banks getting all the breaks and us ‘normal’ people are paying the price. Why not us pay zero tax and big overseas business and banks pay lots of tax … that would please me better!!
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“The commission’s view is that Jersey’s anti-avoidance measure does come within the definition of business taxation rather than personal taxation, is discriminatory and therefore in conflict with the code.”
The above quote is from our official government press release on http://www.gov.je
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Although their regeime has not yet been considered, the States of Guernsey website is saying..
“November, 23rd, 2010, The Policy Council confirms that it has received confirmation that, at its most recent meeting (19th November, 2010), the EU Code of Conduct on Business Taxation (‘Code Group’) agreed with unanimity that the zero/10 corporate tax regimes have harmful effects. It is understood that, whilst the formal assessment process has not technically been concluded, the expectation is that the Crown Dependencies will be required to introduce revised corporate tax regimes.
Although Guernsey’s zero/10 regime has not been subject to review by the Code of Conduct Group the implications of last Friday’s conclusion by the Code Group will need to be thoroughly reviewed and assessed.”
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For five years everyone has known this would happen.
The zero-ten look through provision breaches UK company law… seperate legal entity and all so it should be no surprise that it breaches EU rules too.
Just tax Jersey resident owned companies at 0% like foreign resident owned companies are already taxed.
Introduce a higher rate of tax at 50% for all government employees. That would make us a small fortune and mean that they only enjoy a slightly better standard of living than honest, hardworking people.
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If there is no problem with zero/ten, why have Guernsey elected not to adopted this strategy?
Obviously they do not share the same opinion as our ‘ leaders ‘ that a mass migration of Financial institutions will follow if not adopted.
Possibly Europe have questioned the validity / legality of this Tax structure? What then? Yet more Tax rises for the rank and file?
How can Ozouf et el look us in the face and say the black hole hasn’t been caused by zero / ten? A report clearly indicates this was going to happen. Now they have the audacity to suggest its because spending has increased.
Who’s spending exactly?
Ah the States I hear you cry! So which ever way the hole is viewed, it appears our government have walked us straight into it.
I am looking forward to the Elections next year, to hear the next batch of hollow promises, fiction and down right lies!
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So do we carry on with Zero-Ten or not? (Or isn’t it quite as straight forward as that)!!!!
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Zero 10, as I understand it, has caused a £100 million hole in this island’s accounts. I imagine our states members thought it would be filled by Dandara building houses all over every patch of gree – rather like Ireland – and that has worked so well!
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From the JEP 21st october 2008 -
“Treasury Minister Terry Le Sueur has tabled plans for £650m worth of taxes…
It is also the first budget to include a full year’s GST takings, and the last before the zero-ten corporate tax reforms which will create a tax ‘black hole’ of £86m.”
So, to get this clear, in 2008 the black hole was forecast because of the zero-ten corporate tax reforms, NOT by an increase in public spending. Ozouf, who are you trying to kid?
He, Walker, Le Sueur etc pushed for 0/10 knowing a black hole would happen. GST was introduced specifically to fill this hole.
A return to the old tax systenm would get rid of the black hole and therefore make GST unnecessary. The economy would get a boost because we would all have a bit extra to spend.
The only question to be answered is how much, if any, finance business would be lost by a return to the old tax regime.
Bearing in mind that Jersey’s success and wealth was built while under the old tax system and not the new, and that most foreign companies see Jersey as a well regulated and safe jurisdiction, the hit would be minimal, if at all.
Folks, we have been stitched up. Fellow kippers, please remember that at the next elections. Some of those who voted for 0/10 will be standing and it is because of them that we have a black hole and are paying any form of GST.
VOTE THEM OUT
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Anyone remember life pre Zero Ten…..? It’s been nothing but strife and misery all round since……….
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Isn’t it strange how Guernsey’s States website take on this (as reported at 11 above) is completely at odds with Pinochiozouf’s take on it.
Jersey is the dizziest place in the world…spin spin spin.
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Response to Fed up of moaners
Dear Fed up of moaners,
You are correct in thinking Jersey has the right to decide its own tax model, although a positive relationship with EU member states and international officials is naturally desirable and should be a priority. However to be clear, the concerns raised by the EU Code of Conduct Group are actually about “Deemed Distribution”, and ancillary provision relating to Jersey’s residents with shareholdings in Jersey companies, not 0/10 or a tax structure as a whole. If ultimately any adaptation to Deemed Distribution is required, (which is far from certain), this is a manageable situation and not the disaster that some of Jersey’s detractors, or the JDA, are portraying it as.
Kind regards,
Geoff Cook
Original comment from Fed up of moaners
Posted November 24, 2010 at 4:00 pm
I always thought Jersey had a right to fix its own taxes? And another thing, whats the JDA’s alternate corporate tax model anyway seeing as Ted Vibert is the new ‘expert’?
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Response to truthseeker
Dear Truthseeker,
My understanding of the situation is that while we ARE being told the whole story as it stands, there can be no absolute conclusions until the EU Code of Conduct Group make a definitive ruling. That said, what we do currently know, is that we are in a good situation – if things remain the same, that’s good news for Jersey, if deemed distribution needs to change, (which is far from certain), that’s something we are able to deal with in a positive way.
Kind regards,
Geoff Cook
Original comment from truthseeker
Posted November 24, 2010 at 4:14 pm
Why do I get the feeling we are not being told the whole story here….
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Response to Real Truthseeker
Dear Real Truthseeker,
With the contradictory messages being published by Jersey’s detractors and other sources who are not correctly informed, I can understand why some would feel slightly conspired against! That said, you are absolutely correct in your assessment of the situation, and I appreciate your comments.
Kind Regards,
Geoff Cook
Original comment from Real Truthseeker
Posted November 24, 2010 at 4:39 pm
Here we go again, because there is no major problems, truthseeker automaticaly goes to default position that there must be a conspiracy ooooo…. ahhhh… conspiracy…
Get over it – the EU have said there are some minor changes required, but nothing substantial.
So all the left-wing rabid closet vocal minority are now going to look for somethign untoward.
IF ever there was an example of a ridiculous statement, it is truthseeker above who intimates a conspiracy even before the news has come out.
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Response to Kate
Dear Kate,
Please see my comment to Real Truthseeker.
Kind regards,
Geoff Cook
Original comment from kate
Posted November 24, 2010 at 4:56 pm
well that differs from what I hsve read !!!
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Response to Mark
Dear Mark,
I think one point that needs to be made in answer to your comment, is that that the Code of Conduct applies to EU Member States, as well as Jersey. And although the EU Code of Conduct Group may have issues with our deemed distribution provisions, other EU Member States have provisions in their own tax systems which operate in similar ways. Even the UK has its ‘IR35′ provisions, that have an effect similar to deemed distribution in Jersey. So before we become too concerned, it is perhaps worth asking – will other EU Member States be happy with an extension of the EU’s powers over their own tax affairs? I am not sure they would… But I am confident that Jersey’s tax regime will remain competitive, stable and attractive, even if some changes need to be made.
Kind regards,
Geoff Cook
Original comment from Mark
Posted November 24, 2010 at 4:58 pm
Put in plain speak; ‘They don’t like our tax avoidance regime’.
It has been said that the new owners of RBS International closed the tax avoidance section down, hence redundancies in the Jersey finance industry. Expect more of the same.
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Response to My Opinion
Dear My Opinion,
The ‘minor aspect’ referred to is that of deemed distribution, an ancillary provision that affects Jersey-resident individuals who have shareholdings in Jersey companies. Other EU Member States have provisions in their own tax system which operate in similar ways to Jersey’s deemed distribution.
Kind regards,
Geoff Cook
Original comment from My Opinion
Posted November 24, 2010 at 5:53 pm
Inform us what the “minor aspect” is and then all is transparent.
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Response to Pip Clement
Dear Pip,
You are correct in this, nothing is conclusive so far.
Kind regards,
Geoff Cook
Original comment by Pip Clement
Posted November 24, 2010 at 8:40 pm
The code of conduct group are not the ones that make the decision.
They will report to Ecofin who will make the decision.
So there is absolutely nothing decided yet.
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Response to Green Bean
Dear Green Bean,
There is a very simple answer to this – if people or organisations putting business with Jersey were charged to do so, on top of the fees they are already charged, they simply would not do business with Jersey. And indeed, given they do not live in Jersey or use the health care, education system or infrastructure, why should they pay tax for these services? The tax they do pay indirectly is on the fees that Jersey -based business charge them. And these taxes already pay for approximately 60% of Jersey’s tax take. If this business left because of additional tax, (something it could easily do), and 60% of the tax take for Jersey was wiped out, the impact on ‘normal’ people would be extensive and painful, and impact every area of life.
Kind regards,
Geoff Cook
Original comment by Green Bean
Posted November 24, 2010 at 9:46 pm
Well personally i have no confusion over this debacle of zero-ten …. its costing me and all of us a load of money! Im sick of big non-Jersey based business and the banks getting all the breaks and us ‘normal’ people are paying the price. Why not us pay zero tax and big overseas business and banks pay lots of tax … that would please me better!!
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Response to hot dog
Dear Hot Dog,
While the EU Commission has expressed this view, Jersey is contesting it. The current Code of Conduct does not cover shareholder taxation (the area under debate as being personal or business tax), and an extension voted for by EU Member states would be required for it do so. This would extend the EU Code of Conduct Groups powers over all EU Member States tax affairs, so there is uncertainty as to if this would happen.
Kind regards,
Geoff Cook
Original comment from hot dog
Posted November 24, 2010 at 11:28 pm
“The commission’s view is that Jersey’s anti-avoidance measure does come within the definition of business taxation rather than personal taxation, is discriminatory and therefore in conflict with the code.”
The above quote is from our official government press release on http://www.gov.je
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Response to J-Cat
Dear J-Cat
It is unfortunate that the recent press release by Guernsey’s government has been interpreted by some to suggest that the EU’s Code of Conduct group has rejected the entire principle of 0/10. The statement is very short and general, and doesn’t go into the detail of what elements of the 0/10 are ‘harmful’, which Jersey has confirmed to be deemed distribution. Given as Guernsey says they were not involved in the review, I think these comments are unhelpful and unintentionally give an inaccurate impression.
Kind regards,
Geoff Cook
Original comment from J-Cat
Posted November 24, 2010 at 11:42 pm
Although their regeime has not yet been considered, the States of Guernsey website is saying..
“November, 23rd, 2010, The Policy Council confirms that it has received confirmation that, at its most recent meeting (19th November, 2010), the EU Code of Conduct on Business Taxation (‘Code Group’) agreed with unanimity that the zero/10 corporate tax regimes have harmful effects. It is understood that, whilst the formal assessment process has not technically been concluded, the expectation is that the Crown Dependencies will be required to introduce revised corporate tax regimes.
Although Guernsey’s zero/10 regime has not been subject to review by the Code of Conduct Group the implications of last Friday’s conclusion by the Code Group will need to be thoroughly reviewed and assessed.”
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Response to Mistershifter
Dear Mistershifter,
Guernsey’s comments have been vague at best, and if Jersey does not move from 0/10, I would be very surprised if Guernsey did. It’s true that the black hole we currently face has been impacted by the introduction of 0/10 (which was agreed with the EU Code of Conduct group at the time), however the years of continual overspending equally cannot be ignored.
Kind regards,
Geoff Cook
Original comment by mistershifter
Posted November 25, 2010 at 8:03 am
If there is no problem with zero/ten, why have Guernsey elected not to adopted this strategy?
Obviously they do not share the same opinion as our ‘ leaders ‘ that a mass migration of Financial institutions will follow if not adopted.
Possibly Europe have questioned the validity / legality of this Tax structure? What then? Yet more Tax rises for the rank and file?
How can Ozouf et el look us in the face and say the black hole hasn’t been caused by zero / ten? A report clearly indicates this was going to happen. Now they have the audacity to suggest its because spending has increased.
Who’s spending exactly?
Ah the States I hear you cry! So which ever way the hole is viewed, it appears our government have walked us straight into it.
I am looking forward to the Elections next year, to hear the next batch of hollow promises, fiction and down right lies!
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Response to Myview
Dear Myview,
It is nearly as simple as that! It is, does 0/10 remain they same, or do we alter it’s deemed distribution provision? We still need a definitive ruling from the EU, which is where it gets more complex, as other EU Member states have similar provisions which could also be impacted.
Kind regards,
Geoff Cook
Original comment by myview
Posted November 25, 2010 at 8:25 am
So do we carry on with Zero-Ten or not? (Or isn’t it quite as straight forward as that)!!!!
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Response to Overpopulated
Dear Overpopulated,
It is my firm belief that the ‘black hole’ of £100 million has been caused by government spending growing above and beyond the rate of inflation each and every year. Changes to world economies and global tax policies are a natural part of being an international finance centre – we have no control over this, and can only do our best to respond intelligently and quickly. What we do have control over is our spending.
Kind regards,
Geoff Cook
Original comment by Overpopulated
Posted November 25, 2010 at 8:50 am
Zero 10, as I understand it, has caused a £100 million hole in this island’s accounts. I imagine our states members thought it would be filled by Dandara building houses all over every patch of gree – rather like Ireland – and that has worked so well!
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In response to Geoff Cook.
Until people stop reading the propoganda of people like Richard Murphy of the TJN who in turn is spoon feeding left wing anti-finance people like Geoff Southern, Montfort Tadier and Ted Vibert, who in turn are trying to use his rubbish to disrupt the Island politically, I wouldn’t even bother.
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In the race to the bottom what happens when one jurisdiction decides to pay companies to relocate to them to get more of the cake?
Does Jersey blindly follow suit like it has done to date?
As per the £100M black hole this has occured since 0-10 and this is the reason for the black hole. Yes capital spending could be less but considering Jersey has operated an open door policy, so as to maximise profits for those who own big business over here it isn’t surprising.
It will only keep rising unless severe cuts are made to social sevices or there is a cull of the layers of management in the civil service and their associated index linked pensions IMHO. Or the easy, soft target of increasing taxation on the general population.
As far as I am concerned it is daft to have become so dependent on finance. The finance route will end up causing major problems for Jersey. Diversification is imperative in this modern age where codes of practice can change over night.
This isn’t anti-finance it is common sense.
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“Diversification is imperative in this modern age where codes of practice can change over night.”
You say that but what do you mean? We can’t compete in agriculture or manafacturing because of the costs of land, labour and transport. Tourism can never compete now low cost airlines are so available.
We could have diversified into online gaming much earlier than we did. But all we have in Jersey is intellectual capacity and the ability to draft laws that attract business from outside or that can take advantage in anomalies in the legislation of others: whether funds and trusts or airline and ship registrations or patents or even fulfilment.
Is that what you mean, because I don’t think it is.
If by diversification you mean the States should spend the rainy day fund supporting an unprofitable business that has no prospect of succeeding then I disagree.
0/10 should never have included deemed distribution, which if you look at the States debates was clearly never understood anyway.
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‘We could have diversified into online gaming much earlier than we did.’
How does online gaming score as an island wide industry?
Surely this benefits only a handful of people, some probably not even living in Jersey but merely benefiting from quirks in the law and with computers doing most of the work anyway.
Some legal work for ‘donald’ perhaps, but where is the wider benefit?
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donald there are other alternatives to the spam spam and spam policies of the government. (Insert finance for spam)Refer to Monty Python to see why this is rather apt.
One is alternative power generation. This could be combined with a link to France to break the travel monolopies. There would be many benefits such as allowing people to commute to work in Jersey and have an alternative to overpriced modern buildings, or renting here. It would therefore curtail most of the future necessity to build on green fields in Jersey which occurs at the cost of the environment and peoples pockets with mortgages.
It would also drastically reduce the cost of doing business and living in Jersey due to VAT finally being cut out of the equation due to so called import costs.
There would also be the option to look at the long term viability of Jersey airport and the main harbour as both could be drastically downscaled depending on available alternatives in France.
What about the hospital, could it be downsized and more patients treated across the water? If the costs were lower this would save money.
Electric costs could fall as the middleman could be cut out. Why pay JE when we get the electricity from France and have done for many years?
As I said before there are alternatives to finance, more finance and yet more finance. Why the government is blinkered to this industry is beyond me.
At some stage finance will all but disappear in my honest opinion. Other industries in Jersey have flourished at certain times in history before biting the dust due to change. Why should finance be any different?
donald “We can’t compete in agriculture or manafacturing because of the costs of land, labour and transport. Tourism can never compete now low cost airlines are so available.”
We would have a lot more chance if we had a link to France, wouldn’t we?
Anyone I would prefer to try to be a world leader in something that could lead to financial independence, as opposed to a follower who is chained to the latest whim in leglislation overseas.
As per the rainy day fund, if this is the best Jersey could amass in 60 years of plenty then this is very poor.
I would think it is more than likely going to be swallowed up covering any states pension fund shortfall that may occur over the next 20 years or so.
deemed distribution becoming exempt will mean yet another blackhole within a blackhole.
As per tackling this issue I would have looked into taking a fraction of 1% on all money coming into and out of Jersey and therefore avoided faffing around like what ozouf is doing now. Much simpler and easier to manage in my opinion.
As per 0-10 if it is deemed unacceptable then Jersey is in a mess isn’t it?
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Geoff Cooke Me thinks you do protest too much!
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Rozel,
Well, if Jersey had brought in the legislation to allow online gaming, you – yes, YOU! – could have set up an online betting firm in say 2000. You could have built it up and been a multi-millionaire by now.
Isn’t that what the guys behind Play did? Or is that a bad thing because only a few people own it? They pay Jersey taxes, don’t they?
Grow up, look into the abyss and acknowledge you don’t have the vim to make a man of yourself.
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Adrian – another cunning plan but all these alternative energy plants only make a profit because of massive government subsidy or are part of a larger tax dodge. We need an industry that will generate tax.
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No thanks, Donald.
Not my idea of a good life. Not ready for the op. yet either!
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Adrian,
So your sole ideas seem to be;
1) build a bridge to France, a project that would cost many billions: unless paid for by an EU grant it would have to charge a toll that would be more than current ferry prces (just think through the figures); or
2)alternative power generation, something that has been looked at in Jersey and which is not at present financially viable. It may be viable in future; and
3) taking a percentage off all financial transactions that are structured through Jersey, in the hope that people structuring a £5bn transaction decide that paying £1m to Jersey does’t really matter, even though there are dozens of jurisdictions that wouldn’t charge a penny.
Well, thanks for those ideas.
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Spin, spin, spin!
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The confusion is only in Jersey,I was worried when Senator Walker in his Finance days with the help of Ozouf came back from a meeting with the GB government and crowed that 0/10 was above board and compliant with EU financial Law,it obviously was not and never has been.The sooner Jersey realises that the Boom years Finance has enjoyed are over and starts to diversify our economy the better.
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Sanity “…part of a larger tax dodge…”
donald are you telling me that the toll would be £250 or more for a small car?
24/7 access to France. Surely this has to be better than times which aren’t as suitable for the Jersey market? I don’t know about you but I want to get to France for 7am and not 2pm, if I am traveling further afield.
Travelling at only 30 miles/hour would mean getting onto french soil in @30 minutes. 60 miles/hour would mean an arrival time of @15 minutes!! Less time than it takes to get from an outlying parish to St. Helier. Great for an evening out at a nice French restuarant.
Alternative power. Each day it is becoming more and more viable.
If your figures are unobtainable then it is obviously time to change tack in my honest opinion.
As per ideas I have others but don’t wish to divulge them to non believers.
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