Regarding your Editorial comment ‘The Costly Road to Compliance’
You have helpfully drawn attention to the new measures being introduced in Jersey to dissuade the hosting of contrived and abusive tax schemes designed to frustrate the will of the UK Parliament.
However, it is important I correct the impression that these measures are a response to UK political pressure and that there is a potentially a significant cost to our industry, neither of which is the case.
The recently introduced accelerated tax payment arrangements in the UK will ensure the vast majority of tax schemes, legitimate or abusive, have pre paid their tax liability, pending HMRCs approval or declinature of the scheme. Thus the UK authorities have already developed an effective solution to the abusive tax problem.
These measures are in fact the fruit of over six months work undertaken by the Jurisdictional Sound Business Practice Committee, a tripartite body with representation from government, regulator and industry. Our impetus for action was not UK pressure, but a concern over the impact of these schemes on the reputation of our finance industry.
This class of business is in fact a tiny fraction of the overall Jersey Finance industry business footprint, but its negative reputational impact goes far beyond its economic value. These schemes are designed, manufactured and promoted in the UK, but elements of the schemes, namely bank accounts and trust services have been hosted in Jersey.
We wish to discourage this activity as it is contrived, abusive and against the will of the national Parliament of a major trading partner.
We are a world class international finance centre committed to competing on the basis of market leading financial expertise, political and fiscal stability, sound and progressive regulation, and a competitive tax neutral regime.
As a well regulated and transparent financial centre we feel these measures are entirely consistent with our commitment to be a ‘good neighbour’ to our international trading partners, and a responsible member of the international community.
We also remain fully committed to sound business practices including tax competition and legitimate tax planning.