Government of Jersey

Information about the publication of Ministerial Decisions

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A decision made (15/01/2008) regarding: GST legislation - regulations issued under Part 12, of the law covering treatment of the Financial Services Industry (FSI).

Decision Reference: MD-TR-2008-0004
Decision Summary Title:	Goods and Services Tax – Financial Services Industry – Law & Regulations		Date of Decision Summary:	12th January, 2008
Decision Summary Author:	Steve Lowthorpe – Director GST (Income Tax)		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	Steve Lowthorpe – Director GST (Income Tax)
Written Report Title:	Goods and Services Tax – Financial Services Industry - Regulations		Date of Written Report:	12th January, 2008
Written Report Author:	Steve Lowthorpe – Director GST (Income Tax)		Written Report : Public or Exempt?	Public
Subject: The GST legislation – regulations issued under Part 12 of the law covering treatment of the Financial Services Industry (FSI)
Decision(s): The Minister approved the draft Goods and Services Tax (International Services Entities) (Jersey) Regulations 200- and asked that they be lodged ‘au greffe’ on 15th January 2008, for States debate on the 26th February 2008.
Reason(s) for Decision: To complete the supporting legal framework covering the treatment of Financial Services Industry under the GST system which will be implemented as from 1st May 2008
Resource Implications: No further resource implications, over and above those originally detailed, to implement the GST Legislation.
Action required: Send report and regulations to the Publications Editor at the Greffe.
Signature:		Position: Senator Le Sueur, Minister for Treasury & Resources
Date Signed: 15th January 2008		Date of Decision: 15th January 2008

GST legislation - regulations issued under Part 12, of the law covering treatment of the Financial Services Industry (FSI).

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STATES TREASURY ITEM NO:

REPORT

TREASURY AND RESOURCES MINISTER

GOODS AND SERVICES TAX (INTERNATIONAL SERVICES ENTITIES) (jERSEY) REGULATIONS 200-

The States Assembly agreed on 13th May 2005 (P.44/2005) to introduce a broad-based, 3% Goods and Services Tax (GST) as from 2008. The GST Primary Law was approved by the Assembly on 18th April 2007, was included on the Privy Council agenda on 25th July and subsequently given Royal Assent. It was registered in the Royal Court on 17th August.

The main “core” of supporting legislation in the form of GST Regulations followed under the following timetable:- consultation document and draft Regulations available 3rd August; consultation for 4 weeks; lodge on 11th September; States debate 23rd October 2007. The Regulations were approved on 24th October.

It was stated at the time that Regulations under Part 12 of the GST Law relating to Financial Services Industry (FSI) / International Services Entities (ISE) would be dealt with as a separate exercise.

Treatment of FSI is described in Part 12 of the GST law under the heading International Services Entities (ISEs). Part 12 currently allows an eligible entity on payment of a flat rate fee to be treated as an ISE. As such an ISE would not be a normal taxable person for GST purposes - it would not need to register or charge tax on supplies and would be entitled to end user relief (registered suppliers would not charge GST to an ISE).

The law also proposed a partial refund scheme for service providers which is now being replaced by a further graduated flat rate scheme described in the Regulations. Articles 61 & 62 to be deleted by amendment of the law (see also at 3.6 below).

Treatment as an ISE is optional under Part 12 and eligible entities can opt for normal GST treatment (either registered or non registered) if preferred.

The regulations provide further detail on the following:-

Treatment of the recipients of financial service providers and service providers including eligibility
Level of the flat rate fees involved.
Supplies on which the GST charged can be remitted and a value of supply (£1000) below which remission is optional (to reduce the administrative burden for suppliers)
Procedure for an ISE to claim refund of any GST paid

Other linked changes have been raised by Jersey Finance Limited (JFL)/Financial Services Industry (FSI) some of which will require amendments to the GST law itself and these will be lodged shortly. The linked FSI changes include the following:-

Place of residence
Partial refund Article 61 (under Part 12) to be deleted
Provision for a partnership to be included in a group registration
Payment on an annual basis
Status of ISE – not a taxable person for GST purposes

Financial and Manpower implications

It is still estimated that 10 staff will need to be employed in order to administer the tax at an approximate operating cost of £1 million per annum. However, a 3% GST should generate approximately £45 million per annum in taxation revenue net of operational costs. Of that £45 million, it is expected that some £5-10 million will be derived from the FSI under these Regulations.

15 January, 2008