Assistant Chief Minister Philip Ozouf, whose remit includes financial services, said that the industry would be looking into the detail of the new diverted profits tax due to come into force in April, which is designed to discourage large companies with annual turnovers of more than £10 million from moving their profits overseas in order to avoid paying tax.
- Google tax is a tax aimed at tech companies that divert profits made in the UK. The aim, beginning in April 2015, is to impose a levy on company profits – excluding those of small and medium-sized enterprises – that are routed via ‘contrived arrangements’ to tax havens.
- The UK’s Google tax will bet set at 25 per cent, and will raise about £350m annually by 201718, according to UK Treasury estimates.
- Under the current draft of the Finance Bill 2015, multinationals will have to self-report diverted profits, then defend their actions.
However, Sentor Ozouf said he did not expect it to have a negative impact locally or to affect jobs in the Island.
He also said that measures unveiled by the UK government to crack down on people using offshore jurisdictions to evade paying tax would also not affect Jersey, where tax evasion is already illegal and there is no banking secrecy.
Meanwhile, a tax expert from PwC in Jersey has warned that following another measure announced in the UK Budget on Wednesday, Islanders who own UK property need to be aware that they will be liable to pay capital gains tax if they sell.
Garry Bell, tax director at PwC, said that the move to introduce the new requirement for all non-UK residents disposing of UK residential property from 6 April would also affect companies based in Jersey which own homes across the Channel.
Commenting on the so-called ‘Google tax’ – known as such because its introduction follows a row over how much corporation tax large companies like Google pay – Senator Ozouf said: ‘We will look at the detail, but I do not expect jobs to be affected.’
Mr Bell said the anti-avoidance measure could affect some larger Jersey-based companies, which may need to review their arrangements in the light of the move.
‘There are situations that could be caught in Jersey,’ he said. ‘People need to review their situations to ensure that they are not inadvertently caught.’
He added that more details about the move – under which a 25 per cent tax will be applied to company profits held offshore which HMRC believe relate to UK activities – are due to be released next week.
On the new capital gains rules for non-UK residents selling UK property, Mr Bell said: ‘Any gain arising from 6 April will be subject to tax. That will affect quite a number of people, companies and trusts.’
Peter Willey, EY’s head of tax in the Channel Islands, said it was hard to judge the impact of the diverted profits tax on Jersey. ‘The tax is really targeted at large trading multinationals such as Google, Amazon, Apple and so on, which are selling into the UK from overseas without any substantial presence in the UK,’ he said.
‘However, the draft legislation is very widely drawn and will undoubtedly catch financial services businesses as well as the typical trading business.’
On the new anti-tax-evasion measures, he added: ‘The increasing focus on overseas tax evasion is good for a well-regulated and reputable jurisdiction, such as Jersey. The countries which will suffer are those where regulation is lax and there is little or no control over the flow of investment funds.’
