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It is said that in life only two things are certain; death and
taxes. For a jurisdiction that has built its reputation on a low
tax regime, the EU code group's challenge to Jersey's
corporate tax regime had the potential to be unsettling for
Jersey's taxpayers. International organisations looking to
structure their business and managers seeking to set up investment
funds look for certainty when selecting a jurisdiction, so
certainty over corporate taxation coupled with its top class
regulatory environment is essential to maintaining Jersey's
status as a leading international finance centre.
It is excellent news that any uncertainty regarding Jersey's
zero-ten corporate tax regime has now ended. At its meeting in
September 2011, the EU Code of Conduct on Business Taxation Group
accepted that Jersey's proposal to end shareholder taxation
through attribution of profits or deemed dividends would remove the
harmful effects of the zero-ten corporate tax. This decision was
ratified by ECOFIN in December 2011 thereby strengthening
Jersey's position as a market leading jurisdiction for the
establishment of companies and funds. This is undoubtedly a very
welcome and positive development for Jersey.
Jersey has always sought to maintain its general zero percent
rate of income tax for companies. Tax neutrality is extremely
important for maintaining its competitive position. It allows
businesses to structure commercial operations in Jersey secure in
the knowledge that there will be no taxation burden. Recent
legislation has ensured that this neutrality would be maintained
for funds and similar vehicles. The EU announcement is good news
for other sectors of Jersey's finance industry ensuring that a
simple system of tax neutrality will maintain Jersey's
attraction to all international businesses.
The cost of repealing the shareholder taxation rules is limited
to a cash flow effect to the extent that profits continue to be
distributed to Jersey resident shareholders. The economic benefit
of a neutral regime and the business it attracts to Jersey should
compensate for the £10 million loss of tax which has been
budgeted for.
Clarity over corporate taxation positions Jersey extremely well
to prosper in the future. Jersey has maintained throughout that
zero-ten remains a viable, strong tax regime that is easily
understood by service providers and their clients and at the same
time ensures that Jersey offers stability and remains competitive
with other jurisdictions. The EU's decision gives finance firms
even greater confidence in Jersey as a solid, robust and attractive
centre in which to do business.
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The Risk and Regulation Monthly provides a summary of the key International, European and UK regulatory developments and pertinent regulatory activity affecting the Financial Services industry.
Existing funds which no longer invest after July 22, 2013 are not required to comply with the provisions of the KAGB, even if the manager of such funds also manages funds which still make investments.
The purpose of this investment memorandum is to provide an overview of the investment vehicles (i.e. regulated, lightly regulated and unregulated) that Luxembourg offers to (foreign) entrepreneurs and managers.
The FSA has been in discussions with the banks with regard to them providing appropriate redress for affected customers in relation to the mis-selling of payment protection insurance.
The Court of Justice of the European Union has ruled that VAT on investment management fees paid by the trustees of a UK defined benefit pension scheme is irrecoverable under a VAT exemption for special investment contained in two EU Directives.
The draft legislation transposing the European Union’s Alternative Investment Fund Managers Directive into Luxembourg law was submitted to the grand duchy’s Chamber of Deputies by finance minister Luc Frieden on August 24.
Directive 2011/61/EU on Alternative Investment Fund Managers comes into force on 22 July 2013, and aims to provide common requirements across all EU States for the management or sale of Alternative Investment Funds by Alternative Investment Fund Managers within the EU.
A summary of the most recent financial regulatory developments.
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