A senior Jersey official has told the European Parliament that the Island is "good neighbour" to Europe, and committed to the fight against tax evasion and aggressive tax avoidance.
Colin Powell is the Chief Minister's advisor on international affairs, and he was speaking this week at a meeting of the European Parliament’s Taxe 2 Special Committee, which was set up to examine tax rulings, aggressive tax planning and information exchange in EU Member States and third countries.
Mr Powell told the committee that "Jersey shares with the Committee the importance of transparency and exchange of information with tax and law enforcement authorities on a global basis in the fight against tax evasion and aggressive tax avoidance. We agree that those who do not comply with the international standards set by organisations such as the OECD and the FATF should be identified, but we also believe that those jurisdictions that so comply , as Jersey does, should be internationally recognised as such. What is important is that any categorisation of jurisdictions should be based on an objective, evidence based, analysis.
Our voluntary support of the EU Directive on the Taxation of Savings Income, and in meeting the criteria of the Code Group on Business Taxation, are just two examples of that cooperation which also goes beyond tax matters. Our active cooperation on sanctions implementation, which has been noted and appreciated by the European External Action Service, is another example."
Mr Powell then went on to defend the Island's corporate tax structure:
"No special incentive regimes exist. There are no allowances or exemptions of the sort found in many other countries which have the effect of producing effective rates of corporate tax much lower than the headline rate. With the relatively simple tax structure the Island also has no call for tax rulings of the kind found in many other jurisdictions.
"The standard corporate tax rate of 0% is based on two key principles. One is the Code Group principle of non-discrimination between resident and non-resident owned companies and the Code Group has accepted that the Jersey tax system is not harmful . The other is the principle of tax neutrality combined with transparency. As an international finance centre, Jersey acts as a “financial entrepôt” in facilitating the investment of funds drawn from around the world into European financial markets. It is believed that the return to the investors should be taxed in their home country and the business activity generated by the investment in Europe should be taxed in the jurisdiction where that activity takes place."
Written by Peter Harrison
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March 16, 2016