As published on jerseyeveningpost.com, Monday 12 April, 2021.
JERSEY’S zero-ten company taxation system is nearing its ‘sell-by date’ and needs to be reformed to improve the Island’s international reputation, a former Senator has said.
Ben Shenton, who is now an investment adviser, has called for a conversation to start on the issue, outlining his concerns that the system, which allows many Jersey-registered companies to pay no corporation tax, was reinforcing the perception held by many that the Island was a ‘tax haven’.
In response, Joe Moynihan, chief exectuive of Jersey Finance, said that the Island supported a ‘level playing field’ on international tax, as well as ‘tax neutrality’ – not applying additional layers of tax when money crosses borders.
Zero-ten was introduced in 2009 after the EU Code of Conduct Group raised concerns over the fairness of the Island’s former ‘exempt company’ system, under which foreign-owned companies did not have to pay Jersey tax, instead paying a £600 annual fee.
Under zero-ten, most companies pay 0% corporation tax, while others pay 10% and some 20%, depending on which sector they are in.
Mr Shenton said that at the time zero-ten was a ‘good solution’ to keep the finance industry competitive but that he felt attitudes on the international scene had moved on over the past decade, with governments increasingly hostile towards so-called ‘tax havens’.
He added that had discussed the matter with Jersey Finance and would like see it taken forward to ‘protect both the finance industry and the employment of future generations’.
‘Simply acting in denial and working on the principle that, if we tell the rest of the world we are not a tax haven on a repeated basis, that will be sufficient is both ignorant and dangerous,’ he said
‘Zero-ten is fast approaching its sell-by date and we need to ensure that our next move is both intelligent and successful. There is a global policy in place, which the major economies have agreed to, of “shuttering” tax havens.
‘I do not know what the solution is but, as someone who has had correspondence with both [economist and US secretary of the treasury] Janet Yellen and [former Bank of England governor] Mark Carney, I am better placed than most to provide an informed commentary. Zero-ten is not a viable long-term policy. What is your solution? Lets get a conversation going.’
Mr Moynihan said that Jersey ‘has a strong track record in meeting and adapting to the highest global standards on tax’.
‘The important issue in relation to global corporate tax is that standards are applied in a non-discriminatory manner to achieve a level playing field, while we would also strongly advocate the importance of tax neutrality in supporting effective cross-border investment,’ he said.
‘Jersey Finance is in continual dialogue with its key partners, both locally and globally, to encourage clear, forward-thinking investment that supports wealth creation and positively impacts communities worldwide.’