The authorities in Jersey have reaffirmed the island’s commitment to the business community in light of the global COVID-19 pandemic by amending its rules around economic substance. The jurisdiction has confirmed the circumstances under which it will not determine – under Article 6, Taxation Law 2019 – that a company has failed the economic substance test.
This treatment will only apply to adjustments to the normal operating practices, and to the extent required to mitigate the threats from this outbreak. For example, where a company would normally hold directors’ meetings in Jersey but, to avoid travel or because individuals are self-isolating, these meetings are temporarily held virtually to allow those individuals – or alternatives – to attend.
Similarly, where a company incorporated in another jurisdiction has been tax resident on the basis of control and management in Jersey, and the Comptroller considers that any changes dictated by COVID-19 are temporary, then this will not disturb the determination of corporate tax residence from that prevailing before this outbreak.
Joe Moynihan, CEO of Jersey Finance, commented:
“The measures recently announced will help to reassure Jersey’s finance industry and protect the 14,000-strong workforce specialising in broad and specialist areas of banking, law, governance, accountancy, investment, private wealth and corporate activity. And as an internationally dynamic and resilient international finance centre, we stand ready to help support global financial flows through these unprecedented circumstances – to help channel capital to where it is needed most in the world.
“It is, however, critical that companies are able to show evidence where extreme measures prohibit them from holding an adequate number of board meetings in the Island with directors attending in person or instead, necessitate meetings to be held by telephone or by other means and on a temporary basis. Jersey’s strong regulatory framework sets it apart from other IFCs and our robust AML processes remain fully in place and are not impacted by these provisions.”