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JERSEY: E-COMMERCE


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BACK TO JERSEY INFORMATION: BUSINESS, TAXATION AND OFFSHORE

On this Page:

- JERSEY INTRODUCTION
- JERSEY FACILITIES
- JERSEY LEGISLATION
- JERSEY OFFSHORE ACTIVITIES
- JERSEY CASE STUDIES


Jersey Introduction

Jersey's economic policy encourages information technology operations, in line with the current strategy of business growth without population growth. Jersey has gone a long way towards putting the infrastructure in place for offshore e-commerce, investing millions of pounds a year in telecommunications to exploit its position as a low-tax centre for e-commerce. There are already a number of Internet Service Providers in Jersey, and clear interest is being shown in offshore e-commerce development.

Government policy towards e-commerce has however been hampered by the lack of a clear structure within which development could take place. The Jersey Information Society Commission, which was the focus of development work in 2000 and 2001, ceased to exist in early 2002. Work on e-commerce development then passed to the States' Industry and Commerce Committee before becoming the responsibility of the newly-created Technology, Media & Telecommunications Policy Unit, also known as the TMT Policy Unit in January 2003. The main aim of the unit is to develop comprehensive strategies for the development of the Island’s technology, media and telecommunications industries.

After what was described as a "very successful" strategy meeting in May 2004, the TMT Group committed itself to bringing forward a series of recommendations designed to more fully develop the opportunities offered by e-commerce. According to the TMT Group, the States' decision to adopt the Strategic Plan 2005-2010 was intended to provide a framework upon which policy can be developed in a cohesive manner, and this led to departments drafting new business plans outlining how each aims to deliver the tasks they have been allocated. The business plan for Economic Development included the development of an e-commerce strategy as one strand of its core objective of stimulating 2% per annum real growth in the local economy.

See below for specific information on e-commerce in Jersey, or go to Offshore-e-com.com for an extensive analysis of the commercial possibilities and the legal background.

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Jersey Facilities

Telecommunications Providers

In early 2001, the Government's then main advisory body on e-commerce, The Jersey Information Society Commission, produced a report recommending major changes to the island's telecommunications regime.

The JISC said it had come to two main conclusions - that "Jersey Telecoms is perceived to have served the domestic sector in the Island well' and 'the business sector believes that tariffs outside the island are unacceptably high and that the advanced services offered, in particular for e-commerce, do not reflect international standards of excellence or the needs of an information based economy."

The JISC made two principal recommendations: that the States of Jersey should confirm that a competitive telecommunications environment is the driving force for development and an independent regulator of acknowledged standing with a clearly defined role should be established.

Following the incorporation of Jersey Telecom Group Limited and the establishment of the independent regulation of the industry by the Jersey Competition Regulatory Authority (JCRA) in January 2003, the States of Jersey announced in 2006 that it was in a position to consider the sale of Jersey Telecom. In July of that year, Jersey's Treasury and Resources Department launched a consultation on the proposed sale of the company, which is one of only a few telecommunications operators in the world that remain fully state owned. This consultation concluded in September 2006. In October 2007 Jersey's then Minister of Treasury and Resources, Senator Terry Le Sueur lodged a Report and Proposition asking the States to agree that their shareholding in Jersey Telecoms (JT) should be sold, and requesting the identification of a suitable buyer.

The cost of long-distance calls and internet connectivity was until recently considerably higher than in the mainland UK, although Jersey telecom has cut prices substantially since 2001. In some instances, rates for local, national and international calls were slashed by over 60%, while mobile call tariffs were also cut.

The cost of broadband internet services, expensive by mainland UK standards, has also begun to fall in Jersey. In November 2005, Jersey Telecom announced that it was cutting the price of its broadband services by up to 53% benefiting both home and business users. Residential customers in Jersey opting for the 512Kbit/s service saw prices cut from GBP24.99 to GBP17.99 per month. Jersey Telecom’s 1Mbit/s and 2Mbit/s services were cut from GBP44.99 to GBP24.99 per month (down 44%) and GBP84.99 to GBP39.99 (down 53%), respectively. In 2009, residential broadband prices were about the same as the EU average.

Jersey Telecom has also rolled out a network of Wi-Fi hot spots (or wireless Internet access points) in key locations around the Island, establishing nine in December 2004. The Wi-Fi hot spots enable businessmen and personal users visiting public areas such as Jersey Airport, the Elizabeth Terminal and various hotels not only to access the Internet, but also to check their email and get information from their corporate networks.

Jersey Telecom has also joined forces with Manx Telecom and Wave Telecom to provide telecommunications solutions for their customers with a presence in Jersey, Guernsey and the Isle of Man.

This coordination will ensure customers of all three companies are provided with a consistent approach to their telecommunication requirements and will only need to liaise with a single point of contact for projects spanning all three Islands.

Manx Telecom Managing Director Chris Hall explained: “As small island telecommunications providers we have common interests and face similar issues with our markets and this has led to a close working relationship. This announcement takes that relationship one stage further, to the benefit of our customers who have a business presence in more than one of the three jurisdictions. Our association will effectively allow us to offer them 'joined-up telecommunications' across all three markets.”

Bob Lawrence, Managing Director Jersey Telecom Group, also welcomed the benefits of the agreement and in making the announcement he commented: “It will allow Jersey Telecom to operate more effectively across all three markets which in turn will bring many advantages to our customers. We will continue to build on our relationship to provide further solutions and product development initiatives for our customers.”

On June 1, 2006, Jersey Telecom launched the Island’s first 3G mobile service, part of a GBP12 million investment programme to upgrade its ‘core’ mobile network, bringing customers the very latest in mobile voice and data services.

3G mobile technology is essentially ‘broadband’ for mobile devices and allows users to transfer data at speeds that rival a fixed line broadband connection. This means that customers can access a whole new set of services while on the move, including person-to-person video calling and high speed mobile internet access.

The new 3G network was to be delivered in phases, with the service initially available to pay monthly or ‘contract’ subscribers first. A version for ‘pay-as-you-go’ mobile users was to be delivered soon after. The first sites to be commissioned were in St Helier and from there, the service was due to be rolled out across the Island throughout the rest of the year.

There are three mobile networks in Jersey: Airtel-Vodafone (Jersey Airtel); JT-Wave (Jersey Telecom); and Sure (Cable & Wireless). During 2009 a new entrant entered the mobile market as a virtual operator. Jersey Post Limited launched its Me:Mo product which uses the network facilities of Airtel- Vodafone.

In June 2008, Tim Ringsdore, Sales and Marketing Director of Jersey Telecom, said that broadband was available to over 95% of homes with around 90% of lines capable of supporting the maximum speed of 2MB.

"This has helped make broadband a real success story in Jersey with over 75% of homes enjoying broadband access compared to around 60% in the UK," he said.

“We are committed to investing in the broadband market and new technology is being installed now that will provide speeds of up to 8MB for local users by the end of the year. We are also evaluating fibre broadband, which has the potential to offer speeds of up to 100MB. That’s enough bandwidth to allow a host of new services, such as high-definition TV (HDTV) and super fast web browsing and downloads," he added.

During 2009 Jersey Telecom (JT) the sole provider of both wholesale and retail broadband services introduced new 4Mb/s and 8Mb/s services. In addition to JT and the wholesale reseller Newtel, Cable & Wireless Jersey (branded Sure) also entered the retail fixed line broadband market taking JT wholesale services.

The number of fixed line ISP and Internet access accounts among all operators licensed in Jersey grew by just over 2% overall. This was lower than in 2008 and much lower than in previous years and further hints at the levelling off of demand or saturation of the available market first noted in 2008.

All three mobile operators, Jersey Telecom, Airtel-Vodafone and Sure, offer USB “dongles” for access to 3G HSDPA broadband at rates up to 1.8Mb/s.

The Jersey Competition Regulatory Authority estimates 31,223 registered fixed line ISP accounts (including dialup) at the end of 2009, an increase of 861 on 2008. This would represent a penetration by household of about 82% which is above the UK at 70%.

Voice over Internet Protocol (VoIP) services are also available from Jersey, either through local or off-island suppliers (e.g. Skype).

ISP and Hosting Services

Apart from Jersey Telecom, leading service providers in Jersey include Foreshore Ltd, Itex (Jersey) Ltd, ITSoffshore, OTL International Advertising, Twenty-First Century Box and XKO Communication Systems (Jersey) Ltd.

Foreshore says that its Internet backbone is totally independent of any single telecoms operator or internet service provider and has been designed specifically to meet the exacting needs of offshore e-commerce companies. The company's Jersey Internet Business Exchange is an offshore market-place allowing suppliers and customers to transact business within an ultra-secure environment, unrestricted by any bandwidth or latency limitations, with access to a wide range of specialist service providers to offshore businesses, including payment solutions, real time accounting services, digital or physical fulfillment and banking amongst others.

Payment Processing

Payment processing services are provided by Payoffshore.com Limited through an on-line transaction processing gateway capable of processing all major types of credit and debit card payments. The Gateway is capable of receiving transaction requests from any secure server connected to the Internet on any platform.

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Jersey Legislation

Electronic Communications (Jersey) Law 2000

This Law entered into force on the 1st January 2001 and was promoted by the Jersey Information Society Commission. It provides a suitable environment for the conduct of e-business. The Law covers the following:

  • Legal certainty in respect of certain aspects of electronic transactions; Default rules governing electronic contracts have been included as a fall back and can be varied by the parties. These default rules specify, for example, the time of dispatch of an electronic communication. In the absence of a clear agreement between contracting parties, these rules are important in deciding when and where an electronic contract was concluded. Electronic contracts are given legal recognition;
  • The admissibility into evidence of information in electronic form (including electronic transactions, electronic records and electronic signatures authenticating such communications or records);
  • The removal of obstacles in other legislation to the use of electronic communications and storage in place of paper;
  • Flexibility in application and approach provided by Regulations made by the States, Orders made by the Industries Committee and by Rules of Court.

Protection is provided for ISPs in the form of defences to civil and criminal actions.

New Telecommunications Law

Jersey's telecoms market is being opened up to competition. The government is implementing the recommendations of the JISC (see above) with progressive liberalisation of the telecommunications market through a number of mechanisms, including the introduction of competitive carriers, the establishment of an independent regulator and the adoption of the UK regulatory and licencing model. All of these initiatives are reflected in a Telecommunications Law, which has been approved by the States of Jersey. The Telecommunications (Jersey) Law 2002 was registered on January 4, 2002.

A central purpose of the Law was to abolish the formerly exclusive privilege of the States of Jersey in the telecommunications sector, and to introduce competition in both fixed and mobile telephony. The Law requires providers to hold a licence issued by the JCRA to operate a telecommunications service in Jersey, and currently the JCRA issues three classes of licences, depending on the operator’s market power. Alternatively, a General Class Licence may apply.

Gambling (Remote Gambling Disaster Recovery) (Jersey) Regulations 2008

The Gambling (Remote Gambling Disaster Recovery) (Jersey) Regulations 2008 were the first step in the legislative programme of modernisation of Jersey's gambling laws, and represented the first 'new' gambling regulations to be passed by the States Assembly (the Island's parliament) in 42 years.

The new regulations came into force on January 22nd 2008, and allow companies who are licensed to operate remote gambling services in other jurisdictions to place their disaster recovery, or backup systems, in Jersey and, in the event of disaster, operate temporarily from Jersey.

Intellectual Property

In December 2007, Jersey's then Minister for Economic Development, Senator Philip Ozouf, launched a public consultation on the modernisation and expansion of Jersey’s intellectual property laws. The consultation process followed a meeting hosted by the Minister with leading organisations in the fields of e-commerce and intellectual property. The meeting was held to explore the opportunities arising from the development of improved intellectual property and e-commerce legislation, and to establish whether such development would help to drive economic activity.

New draft legislation unveiled at the time is designed to bring Jersey into line with the law in other jurisdictions, and means the Island will be able to sign up to international conventions on copyright and related rights.

The Draft laws put out to consultation included:

  • Copyright (Jersey) Law 200 - dealing with the right of the author, composer, artist or creator of an original work to prevent another from copying it. Copyright protects material, such as literature, art, music, sound recordings, films and broadcasts.
  • Design Right (Jersey) Law 200 - dealing with the right of the designer to prevent others from reproducing the design. Design refers to the visual appearance or eye appeal of products.
  • Performers’ Protection (Jersey) Law 200 - dealing with the right of the performer to prevent another from copying, recording, broadcasting, or making available a qualifying performance.

Launching the consultation, Senator Ozouf explained that:

“Updating our copyright laws is a key driver in diversifying Jersey’s economy for the future. The creation of a vibrant e-business sector, underpinned by robust intellectual property legislation, will create a new sector, boost economic growth and create new jobs. The commercial sector and the existing financial and legal services will also benefit from this development. We are publishing 280 pages of legislation for consultation, making this a landmark exercise.”

The consultation closed on 7 March 2008.

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Jersey Offshore Activities

The natural bonding of the Internet and Offshore stems from the fact that both, of their nature, manage to avoid tax. Businesses which can operate on the Internet without, so to speak, touching ground in a high-tax jurisdiction will naturally migrate to offshore jurisdictions; while businesses that already have offshore existence will find it highly convenient to be able to use the Internet to trade with their high-tax customers without having to make a landing in their countries.

As a major offshore jurisdiction with many tens of thousands of offshore enterprises already installed, including many trading companies, it is only a matter of time before Jersey becomes a centre of e-commerce activity. The island's geographical location, its good telecommunications links and its sophisticated business infrastructure add to the inevitability of an e-future for Jersey.

By locating websites in Jersey to carry out functions previously based in high-tax jurisdictions such as sales and marketing, treasury management, supply of financial services, and most of all, the supply of digital goods such as music, video, training, software etc, businesses can take advantage of low rates of taxation for increasingly substantial parts of their operation.

In many countries, the distribution of goods from a warehousing facility does not constitute the carrying on of a trade or business in that jurisdiction, so that even for physical goods, in many cases it will be possible to avoid a permanent establishment (taxable presence) altogether in many high-tax jurisdictions where trading activities currently take place.

In June, 2005, then President of Jersey's Policy and Resources Committee, Senator Frank Walker revealed that the Island would be seeking to restrict access to a VAT 'loophole' available to UK retailers establishing operations there.

The provision in European law whereby retailers operating outside of the European Union can sell products priced at under GBP18 to EU consumers free of VAT has seen many large online retailers such as Tesco, Amazon, Asda and Woolworths setting up mail order arms in Jersey, a move which has outraged their UK-based counterparts.

However, Senator Walker said that in future, only UK retailers seeking to establish "legitimate operations", which employ islanders and pay Jersey taxes, will be permitted to locate mail order operations on the Island.

"The publicity we have received regarding this practice has been very unwelcome. It is a real concern - it has been damaging," he explained. However, he went on to add that licences already granted to such firms will not be revoked.

A company operating an e-commerce facility in Jersey will be able to have International Business Company status and will therefore have very low local taxes to pay.

For information about the impact of e-commerce on a number of the main offshore activities which take place in Jersey, click on a link below to go to our specialist E-commerce site Offshore-e-com.com

To see an analysis of the current state of legal and tax issues surrounding offshore e-commerce, click here.

Internet Gaming

In 2004 the Economic Development Committee presented a proposition to the States of Jersey outlining its vision for Gambling within the Island and the EDC is pressing ahead with reform and modernisation of the current Gambling (Jersey) Law 1964. The first and longer term strategy will lead to a new Gambling (Jersey) Law and associated Regulations and a new Gambling Commission (Jersey) Law. These Laws will provide the regulatory framework and the boundaries/opportunities that will enable the gambling industry in Jersey to operate efficiently and effectively in the twenty-first century.

In March 2005 the States of Jersey agreed to request the EDC to bring forward legislation for approval by the States to allow on-line gambling. The States also agreed in principle, that a Gambling Commission should be established in the Island and that the purpose of the Commission should be licensing, regulation, harm reduction/social responsibility and ensuring that gambling issues did not harm the Island’s international reputation.

The EDC, in conjunction with the Policy and Resources and Finance and Economics Committees, has also been tasked with negotiating the introduction of a new public Lottery to be operated jointly for the benefit of the public and charitable institutions in the Island.

Additionally, the Department pressed ahead with the production of new Regulations under the existing Law to allow (in the first stage) for the operation of on-line gambling in disaster recovery mode.

Companies licensed within an approved list of jurisdictions are allowed to apply for a licence to host their disaster recovery services in the Island. In the event that their licensing jurisdiction and/or their licensed operations are affected by some kind of disaster, they are allowed by the terms of their Jersey Disaster Recovery Licence to switch over to a Jersey server for a time-limited period.

The Gambling (Remote Gambling Disaster Recovery) (Jersey) Regulations 2008 came into force in January 2008, greatly increasing the attractiveness of the Island in this regard.

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Jersey Case Studies

If you have a case study in which you think we might be interested please e-mail peter@lowtax.net.

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