EU Finance Ministers (ECOFIN) have formally confirmed Jersey’s position as a cooperative jurisdiction.
In December 2017 ECOFIN had placed Jersey, along with many other jurisdictions, in Annex II. This meant that Jersey had been assessed as cooperative, but subject to the implementation by the end of 2018 of commitments made to the EU’s Code of Conduct Group on Business Taxation.
In Jersey’s case, those commitments related to concerns identified by the Group about the possibility that profits from relevant activities were registered in Jersey without adequate economic activity taking place in the island. ECOFIN yesterday confirmed that Jersey had delivered on its commitment and accordingly removed Jersey from Annex II.
The announcement acknowledges the significant work undertaken by the Government of Jersey to introduce economic substance legislation.
Jersey welcomes news
The Minister for External Relations, Senator Ian Gorst (pictured right), commented: “Jersey has consistently maintained that we are a jurisdiction of substance, and we have worked quickly and effectively to introduce economic substance legislation, meeting a commitment made to the Code Group in November 2017. I welcome the decision today by ECOFIN to remove Jersey from Annex II, reaffirming our reputation as a cooperative and well-regulated jurisdiction that is committed to the development of new international standards in fair taxation.
“We have welcomed the positive opportunities for engagement with the Code Group and Commission Services, to ensure that we fully understood their objectives, and that our proposed legislation achieved that purpose.
“I would like to take this opportunity to again thank the Jersey Financial Services Commission and members of the financial services industry for their productive engagement in the consultation, which took place against a tight timetable over summer 2018.
“We will continue to work proactively with the Code Group, as part of our commitment to meeting global standards on financial services regulation and to further our good neighbour policy with the EU.”
Responding to the positive news, Joe Moynihan (pictured left), CEO, Jersey Finance, said: “We’re pleased that the work Jersey’s government and financial regulator have undertaken over the past year or so, with industry input, to implement economic substance legislation has been recognised by the EU. We have said all along that Jersey was willing and able to work with counterparts in the EU to meet the criteria laid out by the EU’s Code of Conduct Group.
“Having these new rules now in place should give investors and other stakeholders a clear indication of just how seriously Jersey takes its obligations as a well-regulated IFC and of its ongoing commitment to play a positive role in Europe’s future.
“The expectation is that, given the high professional standards and commitment to good corporate governance that already exists in Jersey, most companies will readily be able to demonstrate that they meet the new substance requirements.”
• A Commission fact sheet can be found here