Draft Taxation (Land Transactions) Jersey Law 200-.

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A decision made (03/12/2007) Draft Taxation (Land Transactions) Jersey Law 200-.

Decision Reference: MD-TR-2007-0129
Decision Summary Title :	Draft Taxation (Land Transactions) Jersey Law 200-		Date of Decision Summary:	26th November 2007
Decision Summary Author:	Kevin Hemmings – Head of Decision Support		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	N/A		Person Giving Oral Report:	N/A
Written Report Title:	Draft Taxation (Land Transactions) Jersey Law 200-		Date of Written Report:	30th November 2007
Written Report Author:	Kevin Hemmings – Head of Decision Support		Written Report : Public or Exempt?	Public
Subject: Draft Taxation (Land Transactions) Jersey Law 200-
Decision(s): The Minister approved the Draft Taxation (Land Transactions) Jersey Law 200- and requested that it be lodged “au Greffe” on 4th December 2007.
Reason(s) for Decision: To lodge the draft Law in accordance with a commitment given in the 2008 Budget Statement.
Resource Implications: There are no additional manpower implications as a result of this decision. Additional costs will be covered by the processing fee relating to payments of the Land Transaction Tax. Income from the Tax is, at this stage, uncertain but included in the Budget 2008 at a provisional estimate of £1 million.
Action required: Head of Decision Support to send the draft Law to the Publications Editor at the Greffe and request that it be lodged “au Greffe” on 4th December 2007.
Signature:		Position: Senator Terry Le Sueur, Minister for Treasury and Resources
Date Signed: 3rd December 2007		Date of Decision: 3rd December 2007

Draft Taxation (Land Transactions) Jersey Law 200-.

REPORT

Introduction

The purpose of this Proposition is to introduce the Draft Taxation (Land Transactions) (Jersey) Law 200-. The Draft Law seeks to introduce a tax on certain transactions which confer rights of occupation of land in Jersey. The tax payable will be exactly equal to that which would have been payable under the Stamp Duties and Fees (Jersey) Law 1998 for registered transactions.

Background

This proposition implements the 2005 States decision to approve the Deputy of St Martin’s proposition (P211/2004) charging the (then) Finance and Economics Committee to prepare the necessary legislation, for consideration by the States, to introduce stamp duty on share transfer transactions involving immoveable residential and commercial property in Jersey. The tax introduced in this Draft Law will be known as the Land Transactions Tax (LTT).

The primary purpose and effect of the Draft Law is to achieve equity between the financial costs of purchasers of property by share transfer or freehold. At present freehold purchasers are required to pay Stamp Duty under the Stamp Duties and Fees (Jersey) Law 1998. Those purchasing property by share transfer pay no such charge. In the latter case the owner of the property (i.e. the company in which the shares are purchased in consideration of the right to occupy that property) has not changed – hence there is no requirement to register the transaction in the Royal Court or pay the associated Stamp Duty.

The development of this tax has taken significantly longer than may have been anticipated. A number of options have been considered and discarded as not being suitable for the specific circumstances or legal context of Jersey. Since relevant transactions are not required to be registered at present, the charge will take the form of a Tax rather than Stamp Duty. It was not feasible to simply amend existing legislation as this tax does not readily sit within the remit of any of the following:

Income Tax (Jersey) Law 1961
Stamp Duties and Fees (Jersey) Law 1998
Goods and Services Tax (Jersey) Law 2007

The Draft Law will achieve the desired effect of equity by placing a legal obligation on the purchaser of a property by share transfer to pay a self-assessed tax exactly equal to the Stamp Duty which would have been paid on the purchase of a freehold property. This includes all relevant discounts, etc (e.g. first-time buyers) so the Schedule to the Draft Law is drawn from the Schedule under the Stamp Duties and Fees (Jersey) Law 1998. As the latter is amended, the land transactions tax due will also need to change.

The Draft Law has been prepared to specifically exclude any share transactions in companies where no right of occupation of land is secured as a result. This exclusion removes the need to grant wide-ranging exemptions for transactions which the Draft Law was never intended to capture, recognising concerns expressed by interested parties. At the same time administration on the part of the States is kept relatively straightforward.

The Draft Law creates a number of criminal offences, chiefly:

Failure to pay LTT due
Delivery of false or misleading statements
Registration by a company of a share transfer where LTT was payable and no LTT receipt was produced.

The Draft Law will be administered by the Comptroller of Income Tax. It contains similar powers for the Comptroller and similar rights of appeal for taxpayers as the Income Tax (Jersey) Law 1961. It contains similar powers to remit the amount of LTT due as the Stamp Duties and Fees (Jersey) Law 1998.

Financial/manpower implications

There are no additional manpower implications as a result of this decision. Additional financial costs will be covered by the processing fee relating to payments of the Land Transaction Tax. Income from the Tax is, at the date of lodging this Draft Law, uncertain.

European Convention on Human Rights

Article 16 of the Human Rights (Jersey) Law 2000 requires the Minister in charge of a Projet de Loi to make a statement about the compatibility of the provisions of the Projet with the Convention rights (as defined by Article 1 of the Law). On 30th November 2007 the Minister for Treasury and Resources made the following statement before Second Reading of this Projet in the States Assembly –

In the view of the Minister for Treasury and Resources the provisions of the Draft Taxation (Land Transactions) (Jersey) Law 200- are compatible with the Convention Rights