EU body approves Jersey's Zero-10 tax changes

The Chief Minister said it was good to be able to present States members with some positive news

Changes to Jersey's controversial business tax system have been approved by an European Union body.

Jersey was under pressure to change one part of its Zero-10 tax system.

Earlier this year the Treasury Minister said he would bow to pressure from the EU to change what was described as a small part of Zero-10.

Known as attribution and deemed distribution tax, local shareholders pay Jersey tax on their profits, while foreign shareholders do not.

Last year the EU decided that attribution and deemed distribution tax gave rise to what they called "harmful effects".

Jersey's government agreed to change it and at a meeting with the EU Code of Conduct Group on Tuesday the changes were accepted.

Treasury Minister, Senator Philip Ozouf, said it guaranteed the future of Zero-10, leaving Jersey's competitive tax system alone.

The Zero-10 tax scheme means local companies pay tax while foreign-owned ones do not pay.

But the Treasury said earlier this year it would lose about £10m a year because of the changes.

'Strengthen confidence'

The Chief Minister, Senator Terry Le Sueur, said: "I am pleased to report the Code of Conduct Group accepted that our rollback proposal would remove the harmfulness of our regime.

"This has to be ratified by ECOFIN [European finance ministers] in December at the end of the Polish Presidency.

"This is excellent news for Jersey, and vindicates the consistent stance maintained by the Treasury Minister and myself over a long period."

He added: "In these challenging times it is good to be able to present members with some very positive news which should serve to significantly strengthen confidence in our island's future."