Article

CROWN DEPENDENCIES: Vote of confidence from EU ministers welcomed, as Jersey removed from ‘grey list’.


Added on 14/03/2019

As published on jerseyeveningpost.com, Wednesday 13th March, 2019.

 

The news, which has come at a time when the Island’s finance sector has come under increasing scrutiny, has been welcomed by Jersey Finance Ltd chief executive Joe Moynihan and External Relations Minister Ian Gorst.

Last month UK MPs tried to pass a bill amendment in the House of Commons requiring Jersey to openly publish details of who owns companies registered in the Island.

And the Times newspaper ran a series of articles over the last week concerning rich individuals who avoided paying tax by using offshore jurisdictions, including Jersey.

In 2017, the EU Code of Conduct group compiled a tax ‘blacklist’ naming a number of jurisdictions which could become subject to sanctions for having what it viewed as harmful tax practices.

A number of jurisdictions, including the Crown Dependencies – Jersey, Guernsey and the Isle of Man – were not blacklisted but were asked to make changes to their tax regimes by the end of last year or face being added to a so-called ‘grey list’.

The Crown Dependencies’ governments brought in new legislation in response to concerns about the ‘economic substance’ of companies. This ‘economic substance’ relates to whether the company carries out real business in the island in which it is registered.

The new laws require Jersey companies to demonstrate links to the economic activity they carry out in the Island.

On Tuesday, ECOFIN, a council of EU finance and economics ministers, announced that a further ten jurisdictions had been added to the five already blacklisted, but Jersey was not among them.

Jersey is also no longer listed among the jurisdictions which have been grey-listed.

Mr Moynihan said that the new economic substance laws introduced in Jersey demonstrated its commitment to high levels of regulation.

‘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,’ he said.

‘We have said all along that Jersey was willing and able to work with its counterparts in the EU to meet the criteria laid out by the EU’s Code of Conduct Group.

‘Having these new rules in place should give investors and other stakeholders a clear indication of just how seriously Jersey takes its obligations as a well-regulated international finance centre and of its ongoing commitment to play a positive role in Europe’s future.’

Senator Gorst said that the Jersey had ‘consistently maintained’ that it was a jurisdiction of substance.

‘We have worked quickly and effectively to introduce economic substance legislation, meeting a commitment made to the Code Group in November 2017,’ he said.

‘I welcome the decision today by ECOFIN to remove Jersey from Annex II [the so-called grey list], reaffirming our reputation as a co-operative and well-regulated jurisdiction.’

He added that he would like to thank the Jersey Financial Services Commission and industry professionals for their input when putting together the legislation.

The newly blacklisted countries are Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, Marshall Islands, Oman, the United Arab Emirates and Vanuatu.