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 telecomunications
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 will 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 includes 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 Jersey's
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.
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
that will see Jersey Telecom upgrade its
‘core’ mobile network over
the next twelve months, 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 will 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 will 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.
ISP
and Hosting Services
Apart
from Jersey Telecoms, 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 new Telecommunications Law, which
has been approved by the States of Jersey.
The Telecommunications (Jersey) Law 2002
was registered on 4 January 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.
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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, 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
Sales and Distribution of Physical Products
Sales
and Distribution of Digital Products
Banking
and Financial Services (including Investment
Funds)
Corporate
Support Functions
To
see an analysis of the current state of
legal and tax issues surrounding offshore
e-commerce, click
here.
Internet
Gaming
In
May 2001, Jersey's Gambling Control Committee
outlined proposals for online gaming laws
that would loosen the dominance that the
Isle of Man has enjoyed in that arena.
Charged
with the administration of the Channel
Islands Lottery as well as the Gambling
Control Department, which in turn is responsible
for the administration and control of
the gambling regulations, the Committee
also monitors and controls gambling, analyses
the changing trends within the bookmaking
business and creates policies where necessary
which reflect these trends.
However,
it may not be plain sailing for the Committee
due to the likely opposition it could
attract from the Jersey Financial Services
Commission. The FSC is against online
gaming on the basis that it would be an
avenue for money laundering and would
have a negative impact on Jersey's reputation.
In
December 2002 a report was presented to
the States of Jersey outlining the Gambling
Control Committee's wishes to modernise
the existing Gambling Legislation. As
a result of this report the Committee
commissioned Professor Peter Collins of
Salford University and Anthony Jennens,
Deputy Chairman of Gam Care to research,
report on and make recommendations about
the possibility of permitting internet
gambling services to be supplied out of
Jersey. The academics' report also explored
the possibility of introducing casino
or casino-style gambling into Jersey and
the future of lottery gambling in the
jurisidction with special reference to
the possible participation of Jersey citizens
in the UK National Lottery.
On
the 20th April 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 is pressing
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.
It
is anticipated that companies licensed
within an approved list of jurisdictions
will be 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 would be allowed by the
terms of their Jersey Disaster Recovery
Licence to switch-over to a Jersey server
for a time-limited period.
The
Department set aside resource within its
2006 Business Plan to commence this work.
The completion date for the project will
be determined following confirmation by
the Chief Minister’s Department
that law drafting time is included as
a priority early in the 2007 Legislation
Programme.
As
mentioned above, 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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