On 13 September 2011 the EU Code of Conduct Group accepted that the current zero rate of Jersey corporation tax was not harmful if a proposed change was made which would only affect individuals who are resident in Jersey for tax purposes. The proposal is to abolish the deemed distribution and attribution rules for Jersey resident shareholders. The proposal is that Jersey residents will pay tax only on distributed company profits. The deemed distributions had never applied, and will not apply, to foreign shareholders.
This will result in a one off reduction in public revenues of around £10 million in 2013-14 which will be absorbed in the balanced budget. In this way the continued status of applying a zero rate of tax to companies will continue as at present.
On 14 September 2011 Chief Minister, Senator Terry Le Sueur issued a good-news-for-Jersey statement:
"Following the ongoing Review of our Business Tax Regime, the Treasury Minister proposed, and the States then agreed, legislative amendments which aimed to remove elements of our legislation that were considered harmful by the Code Group.
"At its meeting yesterday, 13 September, which was attended by Jersey officials, I am pleased to report the Code of Conduct Group accepted that our rollback proposal would remove the harmfulness of our regime. This has to be ratified by ECOFIN in December at the end of the Polish Presidency.
"This is excellent news for Jersey."
This confirms Jersey's willingness and ability to ensure that it continues its independent status and good neighbour principle. This will further increase confidence in the island's tax stability, its attraction for inward and outward foreign investment and the economic future of the Island.