Garry Bell, tax director, and Chris Stuart, assurance director, look at what benefits the Islands has to offer when it comes to attracting and keeping finance professionals
Given that we are in the middle of exam season, what could be more appropriate than setting an exam question on a topical issue. Why in these times of increased taxation, regulatory and commercial pressures across the globe, is Jersey continuing to attract quality asset management business and individuals to the Island? Discuss (15 ½ marks).
Could you answer this question with clients, intermediaries and media without hesitation? How does your answer stack up against what the ‘exam board’ (Jersey Finance!) is likely to be looking for?
Individuals and businesses have historically been attracted to Jersey because of it’s relatively low tax environment for businesses operating here and tax neutrality for non Jersey investors. However, there are other strong virtues that can, and do get people interested in the island.
When deciding upon a viable jurisdiction for setting up business, there are two interdependent strands that must be considered: 'Can I do business there?' and 'will the family settle?'
So how does Jersey fare in answering each of those questions? First of all, the viability of the jurisdiction for asset managers to set up their business.
For financial services businesses, Jersey has an appropriate and robust regulatory environment, providing legal certainty for investors and safekeeping of investor assets. The island authorities are very keen to support the growth of alternative asset managers wishing to establish a physical presence with substance in Jersey.
Jersey has an excellent regulatory reputation which has been recently recognised by the IMF, OECD, Global Financial Centres Index and the UK Foot report. In a recent review, Jersey was found to be compliant with 44 of the Financial Action Task Force 40 + 9 recommendations (Luxembourg -10, Ireland- 30, the UK- 36 and the US- 43). Clearly a very strong position at a time of increased global regulatory pressures.
The industry is overseen by an experienced and approachable regulator, operating in a proven Anglo Saxon legislative environment which has a wide range of flexible structures, providing investors with a transparent platform and tax neutrality. There are relatively low corporate tax rates of either 0% or 10% for financial services businesses (fund management business is generally taxed at 0%).The presence of tax obstacles and uncertainty exist in the EU as referred to in the European Commission Expert Groups report, and Jersey is in contrast able to offer tax certainty.
There is also a strong and experienced alternative asset management industry already operating in the island with net assets under administration of approximately £170 billion ($260 billion) and a supporting infrastructure of experienced intermediaries along with an experienced labour pool with a population of circa 90,000 to draw from. In terms of people employed, Jersey’s finance industry is one of the largest offshore territories at over 12,000.
So, as can be seen, Jersey is very much a viable option to operate from, but will the asset managers and their families settle into life and indeed feel welcome in Jersey?
From a family and lifestyle perspective Jersey is very attractive for a number of reasons, as follows:
Whether asset managers are considering relocating existing structures, establishing new structures or moving their business or themselves and family, Jersey is a very attractive proposition.
In our answer to this question, prioritising and emphasising the quality and experience of our service providers, tax certainty, our robust regulatory regime and excellent island lifestyle is key to enhancing the island’s reputation.
Whilst we must of course communicate the structuring advantages offered by our jurisdiction, if our collective aspiration is to make the use of the term ‘tax haven’ to describe Jersey extinct, then in today’s climate more than ever, we must all deliver an A star answer when assisting businesses or people considering relocating.