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Jersey Reviews Taxation Of Distributions

by Jason Gorringe, Lowtax.net, London
19 May, 2015

Jersey's tax agents are being asked to provide their views on a review of the rules applying to the taxation of distributions from Jersey resident companies.

According to Treasury and Resources Minister Alan Maclean, the intention of the review is to improve the distribution rules and, where possible, reduce the administrative burden for taxpayers.

The current distribution rules, which came into effect for the 2013 year of assessment, aim to ensure that Jersey resident individuals will be subject to income tax on the value they take out of a company where there are profits in the company that have been taxed at a rate of less than 20 percent. A distribution could include a dividend paid (income or capital), a repayment of share capital, or a loan repayment.

The review is being undertaken by the Jersey Tax Policy Unit and the Taxes Office who have written directly to tax agents asking them to take part in an online questionnaire. Agents' views will also be canvassed by the Treasury at a series of workshops.

In Jersey, approved tax agent status gives a person authority to prepare and submit trading accounts and related computations and tax returns for third parties. Subject to receipt of the necessary client authority, it also allows them to directly discuss the tax affairs of their clients with the Income Tax Office.

Commenting on the move, Maclean said: "The Treasury has been preparing this review for a few months and we are now at a stage where we want to seek the input of industry and gather their views before making changes to the rules."

He added: "The department [is] considering a number of options, including the extension of the distribution rules to Jersey trustees and we hope that agents will welcome the review and our desire to ensure that any amendments to the distribution rules following the review are the right ones for the Island. The appropriate changes will be contained within the 2016 Budget."

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