Jersey Finance calls for measured response to UK Budget

The body responsible for promoting the island's finance industry has called for a measured approach to understanding the implications of yesterday's UK budget and has stressed that changes to the tax rules around the use of offshore companies to purchase UK residential property worth £2m or more do not represent a problem along the lines of the recent scrapping of LVCR for the finance industry.

Geoff Cook, CEO of Jersey Finance, said: "The changes proposed are fiscal measures designed to increase revenues to the UK Treasury through the collection of stamp duty on UK residential property worth £2m or more. While this is important business for the Channel Islands' finance sector, it is very much a single service within a broad and deep portfolio of services that the islands offer. The demand for such properties has been much in evidence from overseas buyers many of whom will still see the purchase of London based residential property as an attractive proposition despite the imposition of the additional stamp duty charge. It is also important to note that, unlike the changes to LVCR, these proposals do not relate to a specific sub-industry, but only to a particular and specific use of offshore companies. The changes apply to all offshore companies wherever they are located in the world, so the islands are not being singled out for specific attention."

Mr Cook also questioned some comments that the changes may affect the recent confirmation by the EU to approve the Jersey's Zero Ten business taxation regime.

He added: "Zero Ten has been examined in detail by the EU, and by association the UK, and with the recent changes to remove the so-called deemed distribution elements, the regime has been found to be fully compliant with the EU tax code. The Chancellor himself has stated his desire to see tax laws that are simple, straightforward and which work for business and the wider economy and the Zero Ten regime is just such a simple and straightforward tax. The hard work of the Jersey government, in balancing our desire to act as a 'good neighbour' to the UK and Europe, while at the same time safeguarding Jersey's interests, and the successful tax regime that underpins our modern finance industry has been proven, and it is not in anyone's interests to undermine confidence by speculating about the future of Zero Ten when it has been so recently examined and endorsed by the EU.

Responding to suggestions that the budget announcements might impact jobs in the finance industry, Mr Cook again urged for a measured examination of the facts. He said:

"As with any budget announcement, a significant period of review of the detail is needed before all implications can be understood. There will now be a lengthy period of consultation regarding the proposed changes and this will allow Jersey Finance, working alongside industry and government, to consider the detail of the changes and respond accordingly. It is important to point out that these measures affect neither of the two largest activities in our finance industry, namely the collection and administration of deposits and funds.”

The finance industry in Jersey has weathered the global financial crisis well, with recent statistics showing positive growth trends over the last four years since the height of the crisis marked by the collapse of Lehman Brothers in 2008. Jersey has a well-diversified finance industry offering services across banking, funds, private wealth and capital markets, all of which have shown overall growth since 2008. The number of people employed by the industry is also at the highest level for a number of years.

Looking to the future, Jersey Finance highlighted its strategy to promote Jersey internationally based on the island's expertise and high standards, with global target markets including fast growing economies such as India, China, Russia and the Gulf, as well as mature markets, including the UK and Western Europe.

Jersey's international reputation and standing was endorsed earlier this week with the publication of the 11th edition of the Global Financial Centres Index, which for the sixth time in succession, ranked Jersey as the number 1 offshore centre in the world and in the top ten globally for private wealth and banking services.