Arrangement

part 1  3

part 2  18

part 3  19

part 4  20

part 5  23

A LAW to set the standard rate of income tax for 2017 and to amend further the Income Tax (Jersey) Law 1961, the Rates (Jersey) Law 2005, the Stamp Duties and Fees (Jersey) Law 1998, the Taxation (Land Transactions) (Jersey) Law 2009 and the Customs and Excise (Jersey) Law 1999

THE STATES, subject to the sanction of Her Most Excellent Majesty in Council, have adopted the following Law –

“(a)    for the purposes of sub-paragraph (a) of the definition “eligible claimant”, the first £5,000 of such income for the year of assessment;

(b)     in the case of an individual who is an eligible claimant by virtue of sub-paragraph (c) of the definition ‘eligible claimant’, the first £4,500 of such income for the year of assessment; and

(c)     in the case of an individual who is married or in a civil partnership, earned income received or receivable by the individual from his or her spouse or civil partner.”.

“13B Power of Comptroller to disclose information for purposes of certain investigations

Notwithstanding anything in this Law, the Comptroller may disclose information to the States of Jersey Police Force, or to any officer of the Joint Financial Crimes Unit designated under the Proceeds of Crime (Financial Intelligence) (Jersey) Regulations 2015[2], for the purposes of –

(a)     facilitating the exercise by the Joint Financial Crimes Unit of its functions under those Regulations, and in particular of –

(i)      investigating whether or not an offence has been committed under the Proceeds of Crime (Jersey) Law 1999[3] or under the Terrorism (Jersey) Law 2002[4], and

(ii)      prosecuting any such offence; and

“(2)    Without prejudice to paragraph (1), the Comptroller may from time to time take such steps as may be necessary for ascertaining the amount of income in respect of which tax is chargeable at a rate of 0%.”.

“(8)    In this Article and in Article 16A, a reference to a person chargeable to tax includes reference to a person chargeable to tax at the rate of 0%.”.

          “Penalty for late delivery of statement or return”;

“(3B) The specified information is, in respect of a company –

(a)     to which Article 123C applies; and

(b)     which is a trading company carrying on trading activities in Jersey,

the financial statements showing the profits or gains of the company arising or accruing from those activities.”.

“21A Returns equivalent to Common Reporting Standard returns

(1)     The States may by Regulations make such provisions as they think necessary or expedient to require reporting financial institutions which are subject to the requirements of the Taxation (Implementation) (Common Reporting Standard) (Jersey) Regulations 2015[5] (“2015 Regulations”) to be subject to equivalent requirements in respect of the accounts of any person, company or entity resident in Jersey or regarded as resident in Jersey.

(2)     Regulations under paragraph (1) may contain –

(a)     such incidental, supplementary and consequential provisions as appear to the States to be necessary or expedient for the purposes of the Regulations; and

(b)     offences and penalties for breach of the Regulations that are equivalent to those contained in the 2015 Regulations.

(3)     In this Article “reporting financial institution” has the same meaning as it does in the 2015 Regulations.”.

          “Arrangements for new taxpayers and certain exempt persons”.

“(12)  For the year of assessment 2017 and ensuing years, paragraph (10) of this Article also applies to a person –

(a)     whose income for the year of assessment 2015 was below the basic exemption threshold specified for that year, in relation to such a person, by Article 92A; and

(b)     who has not, by 31st December 2016, been served by the Comptroller with either –

(i)      a notice (other than a general notice) under Article 16, requiring a statement to be delivered by the person in respect of the year of assessment 2015, or

(ii)      a notice under Article 25, of the amount of an assessment of income to be charged to tax in respect of that year,

and for the purposes of sub-paragraph (a), ‘basic exemption threshold’ means the amount specified in Article 92A(2), (2A) or (6) (as the case in relation to the particular person may be), without increase by any further or additional amount under any other provision of that Article or otherwise.”.

“part 14A

unilateral relief from taxation for foreign income of qualifying companies

114A Interpretation of Part 14A

In this Part –

‘foreign income’ means annual profits or gains arising or accruing to a qualifying company from a trade carried on out of Jersey or from securities or possessions out of Jersey;

‘foreign tax’, except in Article 114B(6), means any tax on income or of a similar character to Jersey income tax, imposed by the law of the country or territory from which the foreign income arises or accrues;

‘income tax’ means tax chargeable under this Law;

‘overseas territory’ means the country or territory from which foreign income arises or accrues;

‘qualifying company’ means –

(a)     a utility company; and

(b)     a financial services company to which Article 123D applies;

‘underlying tax’ means, in relation to any dividend, foreign tax payable on the profits or gains out of which the dividend is paid;

‘withholding tax’ means foreign tax –

(a)     which is charged directly on a dividend (whether by a charge to tax, or by deduction of tax at source, or otherwise); and

(b)     which neither the company paying the dividend nor the qualifying company would have borne, if the dividend had not been paid.

114B General principles of unilateral relief

(1)     This Part applies where, in respect of foreign income of a qualifying company –

(a)     income tax would, apart from this Article and Article 114C, be charged under Case I, Case IV or Case V of Schedule D on the full amount of the foreign income; and

(b)     foreign tax is payable in respect of the foreign income, under the law of an overseas territory.

(2)     Where this Part applies, the amount of tax chargeable under Schedule D in respect of the foreign income shall be reduced (subject to and in accordance with paragraphs (3) to (10) and Article 114C) by the amount of a credit equal to whichever is the lesser of –

(a)     the foreign tax; and

(b)     the amount produced by –

(i)      computing the amount of the foreign income in accordance with the provisions of this Law, and then

(ii)      charging it to income tax at the rate applicable in the case of the qualifying company concerned.

(3)     In computing the amount of foreign income in respect of which the credit is to be given no deduction shall be allowed in respect of foreign tax (whether in respect of the same or any other income).

(4)     A credit to be given under this Part shall not exceed such credit as would be allowed if all reasonable steps had been taken under –

(a)     the laws of the overseas territory; and

(b)     any arrangements under Article 111 made in relation to that territory,

to minimise the amount of tax payable in that territory.

(5)     For the purposes of paragraph (4), ‘reasonable steps’ include –

(a)     claiming or otherwise securing the benefit of reliefs, deductions, reductions or allowances; and

(b)     making elections for tax purposes,

and any question as to what would be reasonable steps is to be determined on the basis of what might reasonably be expected to have been done in the absence of relief under this Part.

(6)     The total credit for foreign tax to be allowed to a qualifying company for any year of assessment shall not exceed the total income tax payable by the qualifying company for the year of assessment, less any tax which the qualifying company is entitled to charge against any other person or to deduct, retain or satisfy out of any payment which the qualifying company is liable to make to any other person.

(7)     For the purposes of paragraph (6) –

‘total credit’ means the total of credit under this Part and any credit to be allowed to a person for the same year of assessment under arrangements having effect under Article 111; and

‘foreign tax’ includes both foreign tax for the purposes of this Part and foreign tax as defined in Article 112.

(8)     A claim for an allowance by way of credit under this Part shall be made not later than 5 years after the end of the year of assessment, and in the event of any dispute as to the amount allowable the claim shall be subject to objection and appeal in the same manner as an assessment.

(9)     Where the amount of any credit is rendered excessive or insufficient by reason of any adjustment of the amount of tax payable in Jersey or elsewhere, nothing in this Law limiting the time for the making of assessments or claims for relief shall apply to any assessment or claim to which the adjustment gives rise, being an assessment or claim made not later than 5 years from the time when all such assessments, adjustments and other determinations have been made, whether in Jersey or elsewhere, as are material in determining whether any, and if so what, credit falls to be given.

(10)    No claim for an allowance by way of credit under this Part shall be made where a qualifying company has claimed, in respect of the same foreign tax, relief by way of a credit under Article 112.

114C Credit for foreign tax on dividends from subordinate companies

(1)     In the case of a dividend paid to a qualifying company from a company out of Jersey, credit under this Part will not be allowed unless the qualifying company controls, directly or indirectly, 10% or more of the voting power in the company (the ‘subordinate company’) paying the dividend.

(2)     Where, in the case described in paragraph (1), the qualifying company controls, directly or indirectly, 51% or more of the voting power in the subordinate company –

(a)     credit shall be allowed in respect of both underlying tax and withholding tax; and

(b)     for the purpose of calculating the amount of such credit, there shall be added to the amount of the dividend such proportion of underlying tax borne by the subordinate company as is properly attributable in respect of the dividend.

(3)     Where, in the case described in paragraph (1), the qualifying company controls, directly or indirectly, less than 51% (but no less than 10%) of the voting power in the subordinate company, credit shall be allowed in respect of withholding tax only.”.

“(9A) No claim for an allowance by way of credit under this Article shall be made where a qualifying company has claimed, in respect of the same foreign tax, relief by way of credit under Part 14A.”.

“(1)    A contract shall be approved as a drawdown contract for the purposes of this Part if the conditions in paragraphs (1A) to (4) and (6) are fulfilled in relation to the contract.

(1A)   The contract must be made between an individual and a person who is the drawdown contract manager for the purposes of this Article (the ‘manager’).

(2)     The manager must certify to the Comptroller that on the day the contract is to be made, the individual is entitled –

(a)     to minimum retirement income (whether as determined in accordance with Article 131F or with that Article as applied by Article 131FB, and whether by virtue of paragraph (3)(b) or otherwise); or

(b)     to minimum retirement capital.

(3)     The manager must further certify to the Comptroller that –

(a)     the only funds which are permitted, by the terms of the contract, to be transferred in to the contract are –

(i)      the individual’s fund value in an approved Jersey scheme, and

(ii)      funds which may be withdrawn for the purpose, under Article 131E(4)(e)(i), from an approved trust;

(b)     where, on the day the contract is to be made, the individual would not otherwise be entitled to minimum retirement income (whether as determined in accordance with Article 131F or with that Article as applied by Article 131FB) or to minimum retirement capital, the contract requires the manager –

(i)      to purchase, from an authorized insurance company unconnected with the individual, a lifetime annuity payable to the individual and sufficient to secure that, on that day, the individual is entitled to minimum retirement income (whether as determined in accordance with Article 131F or with that Article as applied by Article 131FB), or

(ii)      subject to the requirements of Article 131E, to transfer sufficient funds to a trustee for the establishment of an approved trust;

(c)     after any such purchase or transfer as described in sub-paragraph (b) has taken place, the contract requires the manager to invest any remaining funds in –

(i)      cash deposits with any bank, building society or other institution carrying on deposit-taking business in the jurisdiction in which it is authorized to carry on such business,

(ii)      securities or financial instruments traded on a recognized stock exchange,

(iii)     units in collective investment funds within the meaning of the Collective Investment Funds (Jersey) Law 1988[6], or

(iv)     investments falling within paragraph 9 of Schedule 1 to the Financial Services (Jersey) Law 1998[7] (long term insurance contracts);

(d)     the contract prohibits any payments to any person other than the individual or his or her personal representative, apart from the payment of –

(i)      sums applied in the purchase, from an authorized insurance company unconnected with the individual, of a lifetime annuity payable to the individual or, on the individual’s death, to a dependant of the individual,

(ii)      fees and commission properly incurred in the administration of the contract, and

(iii)     tax accounted for to the Comptroller;

(e)     the contract requires the manager to pay to the individual such income or other sums arising or accruing from the funds invested under the contract as the individual may require;

(f)      where, on the individual’s death, there remain any funds invested or sums accrued, the contract requires the manager within the period of 3 months beginning with the date of death to pay all such funds or sums to the individual’s personal representative;

(g)     the contract requires the manager to deliver to the Comptroller, within the period of 3 months immediately following the end of a year of assessment or (as the case may be) within the period of 6 months beginning with the date of the individual’s death, a statement showing –

(i)      the amount of the funds invested at the beginning of the preceding year of assessment or (where the contract has been in effect for less than a year) at the date of commencement of the contract,

(ii)      monies received during that year of assessment or (as the case may be) during the period for which the contract has been in effect,

(iii)     monies paid out during that year of assessment or (as the case may be) during the period for which the contract has been in effect, and to whom such payments were made, and

(iv)     the amount of all funds invested at the end of that year of assessment and the persons or bodies in or with whom such investments are made.”.

“(7)    The manager must comply with any request from the Comptroller to deliver to the Comptroller, within such reasonable time as the Comptroller may specify, all such documents and information as the Comptroller may reasonably require for the purpose of verifying –

(a)     any matter certified to the Comptroller by the manager under paragraph (2) or (3); or

(b)     compliance with any requirement or condition under paragraph (6).”.

“ ‘minimum retirement capital’ has the meaning given in Article 131FA;”.

“131FA  Minimum retirement capital

(1)     An individual’s minimum retirement capital shall be determined in accordance with this Article.

(2)     An individual is entitled to minimum retirement capital if, on the day for which the entitlement is to be determined, the individual is entitled to relevant capital in excess of such threshold as may be prescribed.

(3)     For the purposes of this Article and Article 131FB, ‘relevant capital’ means capital of such amount and nature, determined in such a manner, as may be prescribed.

131FB    Application of relevant capital factor in calculation of minimum retirement income

(1)     This Article applies where, on the day for which such entitlement is to be determined, the individual is entitled neither to minimum retirement income determined in accordance with Article 131F as unmodified by this Article, nor to minimum retirement capital.

(2)     Where this Article applies –

(a)     there shall be subtracted, from the amount of the old age pension specified in paragraph 3(1) of Part 1A of Schedule 1 to the Social Security (Jersey) Law 1974[8], the amount of the relevant capital factor in the individual’s case; and

(b)     the individual’s entitlement to minimum retirement income shall be determined, and Article 131F shall apply, as though the reference in paragraph (2) of that Article to the amount of the old age pension so specified, were to that amount reduced as described in sub-paragraph (a).

(3)     For the purposes of this Article the ‘relevant capital factor’ shall be such amount, determined in such a manner, as may be prescribed.”.

“131OA             Exemption from tax for lump sums paid from overseas schemes

(1)     In this Article –

‘approved occupational pension scheme for overseas employees’ means a scheme approved under Article 131A;

‘approved retirement annuity contract for overseas residents’ means a contract approved under Article 131C;

‘fund value’ in relation to an overseas scheme has the meaning given by Article 130B –

(a)     disregarding the references to Articles 131(9), 131B(7) and 131CA(6); and

(b)     as if, in paragraph (1)(c) –

(i)      the references to an individual or primary beneficiary were to a pension holder of an overseas scheme, such scheme not being included in paragraph (1)(a) or (b), and

(ii)      the references to a retirement annuity contract or a retirement trust scheme were to an overseas scheme, such scheme not being included in paragraph (1)(a) or (b);

‘net fund value’ in relation to an overseas scheme, means the fund value on the day of payment less –

(a)     for each relevant amount previously paid from the overseas scheme, the sum of A and B where –

(i)      A is the amount previously paid, multiplied by 7 and then divided by 3, and

(ii)      B is so much of the increase or decrease in the fund value since the day the previous payment was made as is attributable to A; and

(b)     for each relevant amount previously transferred into the overseas scheme, the sum of C and D where –

(i)      C is the amount transferred into the scheme, and

(ii)      D is so much of the increase or decrease in the fund value, since the day the amount was previously transferred into the scheme, as is attributable to C;

‘overseas scheme’ means –

(a)     an approved occupational pension scheme for overseas employees;

(b)     an approved retirement annuity contract for overseas residents;

(c)     any scheme, arrangement, contract, trust or equivalent established outside Jersey which, in the Comptroller’s opinion, is for the provision of benefits the characteristics of which are similar to those provided under an approved Jersey scheme (disregarding any characteristics relating to the jurisdiction in which the scheme, arrangement, contract, trust or equivalent is established or the residency of any member or other beneficiary);

‘pension holder’ means –

(a)     in relation to an approved occupational pension scheme for overseas employees, a member of the scheme who was such an overseas employee;

(b)     in relation to an approved retirement annuity contract for overseas residents, the individual by whom the contract was made;

(c)     in relation to any other overseas scheme, means any of the following –

(i)      an individual who is classified by the scheme as a member of that scheme,

(ii)      where the scheme does not classify any individuals benefitting from the scheme as members, an individual for whose benefit the scheme is primarily established;

‘relevant amount previously paid’ means a lump sum previously paid to any person from the overseas scheme if such lump sum has been, or was treated as being, wholly or partly exempt from tax under the jurisdiction in which it was paid and, if different, received;

‘relevant amount previously transferred’ means an amount previously transferred into the overseas scheme from any other scheme whether an approved Jersey scheme or an overseas scheme;

‘serious ill health’ is to be construed in accordance with Article 130(3)(b) as if ‘pension holder’ had the same meaning given by this paragraph.

(2)     For the purposes of paragraphs (4), (5) and (6) –

(a)     the reference to the commencement of benefits in relation to an overseas scheme is a reference to whichever is the earliest of –

(i)      the receipt by the pension holder of a lump sum (whether or not by way of commutation) of part of the fund value of the overseas scheme,

(ii)      the day from which income from the overseas scheme is paid to the pension holder, whether or not the pension holder actually receives a payment on that day, or

(iii)     the pension holder attaining the age of 75; and

(b)     where –

(i)      a pension holder transfers the whole or part of his or her fund value from an overseas scheme or an approved Jersey scheme to an overseas scheme, and

(ii)      benefits have commenced from the scheme from which the fund value is transferred,

benefits shall be taken to have commenced from the overseas scheme to which the fund value is transferred.

(3)     Subject to paragraph (5), a lump sum paid from an overseas scheme on or after 27th March 2015 to any of the following –

(a)     a pension holder who is resident in Jersey at the time of the payment;

(b)     if paragraph (4) does not apply, the pension holder’s estate if that estate is situated in Jersey;

(c)     if paragraph (4) does not apply, any person who is resident in Jersey at the time of payment,

shall be exempt from income tax to the extent that the lump sum does not exceed 30% of the net fund value.

(4)     Where, before the commencement of benefits from an overseas scheme, a pension holder dies or is in serious ill health, a lump sum representing the same amount as the whole fund value and paid –

(a)     in the case of death –

(i)      to the pension holder’s estate if that estate is situated in Jersey, or

(ii)      to any other person who is resident in Jersey at the time of the payment; or

(b)     in the case of serious ill health, to the pension holder who is resident in Jersey at the time of payment,

shall be exempt from income tax.

(5)     A person who is described in paragraph (3)(a) or (c), or in the case of (3)(b) a representative of the pension holder’s estate, may elect for 30% of the lump sum from the overseas scheme to be exempt from income tax instead of it being exempt from income tax in accordance with paragraph (3), if –

(a)     benefits from the overseas scheme commenced on or after 27th March 2015;

(b)     except where paragraph (6) applies, the election is made by the last Friday in July in the year following the year of assessment in which benefits from the overseas scheme commenced;

(c)     the election is in such form as the Comptroller determines; and

(d)     the election applies to all lump sums paid to that person from the scheme.

(6)     Where benefits from the overseas scheme commenced in the year of assessment 2015, the election under paragraph (5) must be made on or before 28th July 2017.

(7)     An election under paragraph (5) is not allowed if –

(a)     an amount has been transferred to the overseas scheme from an approved Jersey scheme or another overseas scheme; and

(b)     benefits have commenced from that Jersey approved scheme or other overseas scheme.

(8)     An election under paragraph (5) shall be irrevocable.”.

“(a)    the Comptroller or the Minister may disclose information, for any purpose connected with the grant and loss of Regulation 2(1)(e) status, to –

(i)      the Chief Minister, including an officer in an administration of the States for which the Chief Minister is assigned responsibility, or

(ii)      an officer discharging the functions of a housing control manager, and responsible for those functions to the Minister for Social Security; and

(b)     an officer mentioned in sub-paragraph (a)(i) or (ii) may disclose information to the Comptroller or Minister for Treasury and Resources for the purposes of the exercise of any function under Article 135A.”.

“(3)    Notwithstanding paragraphs (1) and (2), the Assessment Committee may for the purposes of this Law revalue any land in accordance with Regulations which may be made by the States for this purpose and which may in particular –

(a)     make provision for a method by which revaluation of land is to be carried out; and

(b)     apply any provision of this Law in its application to such land in a manner modified by the Regulations.”.

“(aa)  making provision for and in relation to revaluation of land under Article 5(3);”.

“(B)   the purchaser is a person who has Entitled status in accordance with the Control of Housing and Work (Residential and Employment Status) (Jersey) Regulations 2013[12], other than by virtue of Regulation 2(1)(e) of those Regulations, or is the spouse or a civil partner of such a person and is joint transferee with that person.”;