Welcome to the second Economic Substance Update, produced by the Taxes Office. This supplements the information provided on the gov.je Websites - EconomicSubstanceForCompanies page.
Passage of the Taxation (Companies– Economic Substance)(Jersey) Law
The States Assembly passed the proposed legislation on Thursday the 6th December, with just one abstention and no votes against.
The next stage is for the Law to go to Privy Council for sanctioning, and then back to the Royal Court to be registered.
Whilst this procedure is required for the Law to be placed on the statute books, it will still be effective per Article 20 from the 1st January 2019.
Publication of economic substance legislation in other jurisdictions.
Other jurisdictions are publishing their ( draft ) legislation in response to the concerns raised by the EU’s Code of Conduct Group. As an example for practitioners the Caymans legislation is easily accessed through its government website (Caymans Economic substance), others can be obtained through their respective government’s publications.
Although the Taxes Office doesn’t comment on specific legislation, generally it would appear that there is a consistency in the framework of most of the legislation seen. It would also seem that generally the nexus used for the application of the economic substance test will be equivalent to tax residency as understood in Jersey.
2018 Company Tax Returns Relevant Activities
The 2018 company tax return is scheduled to be released in January 2019. This return asks for details of each company’s activities, which will include the relevant activities under the new Taxation ( Companies- Economic Substance)(Jersey) Law. Companies will have to consider their activities in 2018 when completing the relevant return. This information will also allow the Taxes Office to establish a baseline position for companies in advance of the application of the Economic Substance Law.