A NEW tax will be introduced on sales of higher value share-transfer properties and land currently less liable to stamp duty and other charges, if proposals are passed by the States.
Treasury Minister Susie Pinel has lodged a proposition to introduce law changes to increase the taxation of ‘enveloped properties’, which are defined in Jersey law as those owned by any legal ‘entity’ which is not a person, such as a company or a trust.
Money raised from the new tax regime would be placed in the Housing Development Fund, which is used to develop social housing.
Share-transfer companies own a large number of properties in Jersey, such as buildings which contain multiple dwellings. People buy shares in the company to acquire ownership of an underlying property.
The report accompanying Deputy Pinel’s proposition says that transactions on these sorts of properties currently have lower exposure to tax when the land changes ownership.
In her proposition, the minister said: ‘Under the current rules, where Jersey land is enveloped within a company, and the ownership of the company changes hands by way of a transfer of shares, only certain transactions are caught within the charge to tax (stamp duty or land transactions tax).
‘For all other transactions, which includes all transfers of shares relating to commercial land, there is currently no charge to stamp duty or land transactions tax. A primary purpose of this draft law is to ensure broadly equivalent treatment across similar types of transactions involving land in Jersey.
‘Any revenue raised from this measure – up to £1 million per annum – is proposed to be allocated to the Housing Development Fund.’
It adds that the new tax will be called the enveloped property transactions tax and will only apply to deals where the land is worth £700,000 or more for commercial properties and £500,000 or more for residential properties.
‘These thresholds are to mitigate any adverse impact of the draft law on lower-value properties, including those in the retail and hospitality industries,’ the report says.
The proposition is due to be debated on 8 February.
