Income Tax (Amendment No. 42) (Jersey) Law 201-: Lodging

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A decision made on 3 December 2012:

Decision Reference: MD-TR-2012-0107
Decision Summary Title:	Income Tax (Amendment No. 42) (Jersey) Law 201-		Date of Decision Summary:	30 November 2012
Decision Summary Author:	Director – Tax Policy		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Income Tax (Amendment No. 42) (Jersey) Law 201-		Date of Written Report:	30 November 2012
Written Report Author:	Director – Tax Policy		Written Report : Public or Exempt?	Public
Subject: Lodge au Greffe draft Income Tax (Amendment No. 42) (Jersey) Law 201- making a change to the tax treatment of limited liability partnerships.
Decision(s): The Minister approved the draft Income Tax (Amendment No. 42) (Jersey) Law 201- and its accompanying report for lodging ‘au Greffe’ with a request for debate at the same time as the States considers the changes being lodged by the Minister for Economic Development to the Limited Liability Partnerships (Jersey) Law.
Reason(s) for Decision: To enable the draft Income Tax (Amendment No. 42) Law 201- and its accompanying report to be lodged ‘au Greffe’ with a request for debate at the same time as the States considers the changes being lodged by the Minister for Economic Development to the Limited Liability Partnerships (Jersey) Law.
Resource Implications: None.
Action required: Forward the draft Income Tax (Amendment No. 42) (Jersey) Law 201- and its accompanying report to the Greffier of the States and request that the projet be lodged ‘au Greffe’ for consideration by the States at the same time as the States considers the changes being lodged by the Minister for Economic Development to the Limited Liability Partnerships (Jersey) Law.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Income Tax (Amendment No. 42) (Jersey) Law 201-: Lodging

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Treasury and Resources

Ministerial Decision Report

DRAFT Income Tax (Amendment No 42) (Jersey) Law 201-

Purpose of Report

The purpose of this report is to brief the Minister for Treasury and Resources on the draft Income Tax (Amendment No. 42) (Jersey) Law 201-. This amendment makes a change to the tax treatment of limited liability partnerships.

Background

A review has been undertaken by the Economic Development Department into ways in which to make the Jersey limited liability partnership (LLP) more attractive to international investors. As part of that review it has been identified that the Jersey tax treatment of LLPs is not in line with standard international practice, and that this could be a deterrent to those seeking to make use of the structure. The draft Income Tax (Amendment No. 42) (Jersey) Law 201- proposes to amend the treatment of limited liability partnerships for the purposes of Jersey tax.

Research

Currently, Jersey LLPs are taxed in the same way as Jersey general partnerships, in that an assessment is raised on the partnership and not on the individual partners. This is known as “tax opacity”. Other territories, and in particular the UK, which have LLP structures, tax the partners on their share of the LLPs income and gains (“tax transparency”).

It is proposed to bring the Jersey tax treatment of LLPs in line with standard international practice by changing the way they are taxed so that assessments will in future be raised on the partners and not on the LLP itself.

As this amendment to the Income Tax Law has come from the review of the LLP Law being undertaken by the Economic Development Department, it is being lodged at the same time as the Minister for Economic Development is lodging his amendments to the LLP Law.

As no Jersey LLPs have been formed to date, no existing LLPs will be affected by the change.

Recommendation

It is recommended that the Treasury Minister (“the Minister”) should approve the Amendment to the Income Tax Law and its attached report, and sign the declaration of compatibility with the European Convention on Human Rights and the Decision Summary, and that the documents should be lodged au Greffe so as to allow the Amendment to the Income Tax Law to be debated by the States at the same time as the States considers the changes being lodged by the Minister for Economic Development to the Limited Liability Partnerships (Jersey) Law.

Reason for Decision

To enable the draft Income Tax (Amendment No. 42) Law and the accompanying report to be lodged ‘au Greffe’ and considered by the States at the same time as the States considers the changes being lodged by the Minister for Economic Development to the Limited Liability Partnerships (Jersey) Law.

Resource Implications

No additional financial or manpower requirements will arise from the implementation of Income Tax (Amendment No. 42).

Report author : Director – Tax Policy	Document date : 30 November 2012
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