Businesses in Jersey face new taxes if the 2018 budget is approved.
Politicians meet today (Tuesday) to debate Senator Alan Maclean’s package of measures which faces multiple amendments, including to the controversial retail tax which would be payable by the island’s largest shops.
Senator Maclean said: “We need to maintain investment in priority services and our balanced approach to savings, efficiencies, and revenue raising secures that investment in a way that is fair, appropriate, and in the best interests of our island. The post-Brexit reality is an uncertain one but our strong public finances and resilient economy are well positioned to manage both the opportunities and threats that will emerge.”
The retail tax has sparked opposition from those working in the trade, including concerns raised by the Chamber of Commerce who fear it could lead to cuts in investment in premises, training and products.
Chamber Vice-President and Chair of the Retail & Supply Committee, Mark Cox, said: “It is important that commerce makes a fair contribution towards the island and the introduction of this tax appears to provide a degree of continuity for all retailers with a presence in Jersey. However, throughout 2017 there has been a constant drip feeding of business levies, charges and taxes. The budget is proposing this new retail tax, along with the widening definition of financial services, in order to capture more companies that pay the 10% rate. All of these measures are ultimately pointing towards the need for a thorough review of the island’s tax system.”
Among the many amendments to the budget, Senator Philip Ozouf wants the new retail tax rate set at 10% rather than the proposed 20% – which would reduce the tax revenue by £3million. To offset that, he wants to cut the inbound duty free allowance for cigarettes from the current 200 cigarettes to 40, and he is proposing the retail tax is extended to include bookmakers, pubs and club.
You can read the full budget statement here.
You can read all the amendments here.
Here’s an outline of the key budget measures:
Impôts
2.5% (RPI) increase on alcohol, petrol and diesel
RPI plus 5% increase in duty on tobacco, slightly higher for hand rolling tobacco
Vehicle Emissions Duty
VED rates increase by 2.5%
Low emission cars exempted
Company taxation
An extension of the 10% corporate income tax rate for certain financial service companies to include…
- Companies registered under the Financial Services (Jersey) Law 1998 to carry out general insurance mediation business (“GIMB”) (Law Class P & Q only)
- Companies registered under the Financial Services (Jersey) Law 1998 to carry out fund services business as a registrar
- Companies registered under the Financial Services (Jersey) Law 1998 to carry out money service business (“MSB”)
- Companies holding permits under the Insurance Business (Jersey) Law 1996
- Finance companies – which generally includes companies providing credit facilities to ‘customers’
Retail tax
Retailers in Jersey with turnover exceeding £2m and net taxable profit over £500k will pay 20% income tax on their profits. There’ll be a taper to avoid a cliff edge effect when profits are only just over £500k and under £750k, when the full 20% rate will apply. Anti-avoidance rules will be introduced to prevent retailers fragmenting their operations to keep the non-retail parts outside the 20%.
Property taxation
From 2018, a tax deduction cannot be claimed against rental income for the cost of property rates.
Personal taxes
Allowances will increase by 2.5%, meaning a single exemption of £14,900, married of £23,950 and a second earner’s allowance of £5,850.
Changes to High Value Residents Scheme
New ‘high value residents’ will need to commit to paying a minimum income tax contribution of £145k, with a top-up system for those who don’t generate enough income to pay that minimum.
Indirect taxes
There are changes to the international services entity (ISE) fees paid by various entities. An ISE is a business that mainly serves non-residents of Jersey and is therefore exempted from GST. The increases proposed vary, from £8,000 for banks, £1,850 for trust companies, and £620 for CIF permit holders and fund services businesses.
Anti-avoidance
Measures will be introduced to prevent pension funds being transferred overseas during a temporary period of non-residence. A tax liability could arise if the individual recommences residency in Jersey.
