Budget 2017: States looking to raise more tax from businesses

Tuesday 18 October 2016

Jersey's Treasury Minister has promised the current zero/ten corporate tax system is not being reviewed - but they are looking for ways to get businesses to pay more.

In Budget 2017, which will be debated by the States in December, Senator Alan Maclean wants to change the 2016 corporate tax return to collect profit information from more companies - he will then use this to, "...determine what opportunities might exist to raise additional revenue from businesses, without disturbing the framework of the Island's business tax regime."

The Treasury says it needs to collate profit data to demonstrate that 0% remains the general rate of corporate tax - they are already collecting that data from locally owned companies paying 0% tax, but want to change the law to collect the figures "...from a wider range of 0% companies."

Under zero/ten, companies outside of the financial services sector don't pay corporate tax, except for the utilities who are charged at a rate of 20%. That has caused controversy with those who argue the Island is missing out on much-needed revenue, and the fact that it means non-locally owned companies, outside of the financial services sector, aren't contributing to the local income tax take, although their employees will be. 

It is a highly sensitive subject with competitor jurisdictions, and regulators, watching very closely for any changes to the Island's corporate tax arrangements - which is why the Treasury Minister was at pains to state that while no changes were to be made to zero/ten, the Treasury was simply looking at how the current system could provide "...opportunities for a greater yield."

Budget 2017 showed that although the Island held £6billion in assets, it was heading for a deficit in general revenue expenditure over income of £88million in 2016, once depreciation had been factored in, dropping to a very small surplus of £3.5million in 2019 on income of £772million.