The States are being asked to change the Income Tax law to make it easier for the finance industry to do business.
If they agree to an amendment brought by the Economic Development Minister, a locally incorporated company will not be regarded as resident in the Island for tax purposes if its management and control is carried out in another jurisdiction, and its rate of income tax is ten per cent or more.
Exempt companies, which are based in Jersey on paper only, will end when the ‘zero/ten’ tax reforms are introduced in 2009.
Yet these companies are currently regarded as being resident in the Island for tax purposes even though they generally do not pay any.
This can cause problems when a Jersey company is also tax resident in another jurisdiction.
Freeing them from tax residency here will allow them to act in a wider range of high-value transactions.
This change will probably increase work being undertaken by businesses in Jersey although there is likely be a small loss in the number of exempt companies.
