John Riva, head of tax at KPMG Channel Islands, says plans to amend the controlled foreign companies rules in the next Finance bill, prompted by the Cadbury Schweppes case and outlined in Chancellor Gordon Brown’s pre-Budget report last week, would enable UK companies to apply to the taxman to disregard profits arising from business establishments in other European Union countries or the European Economic Area.
As the Channel Islands are in neither category this could put CI companies owned by UK organisations at a competitive disadvantage, he adds.
‘We should be negotiating with the UK trying to get all companies and individual residents in Jersey treated the same as in other EU countries.
‘We operate within the EU code of conduct on business taxation by virtue of our association with the UK.
Because of that we have proposed radical changes to our fiscal regime so it seems inappropriate to discriminate against us now.