Jersey, Channel Islands
Group taxation is not permitted in Jersey. However, there are provisions for group relief between group companies subject to the same rate of tax. It is not possible to relieve losses between two companies taxed at different rates. It is not possible for group companies to relieve losses from Jersey property rental income. Also, it is only possible to relieve losses from Jersey property development profits and from quarrying activities against profits arising from the same activities.
There are no specific rules in relation to transfer pricing in Jersey. There is, however, a general anti-avoidance provision in Jersey tax law. It may be applied by the Comptroller of Taxes if a transaction or a combination or series of transactions is entered into for the avoidance or reduction of Jersey income tax. In addition, interest relief may be restricted where the interest incurred exceeds the amount that could reasonably be expected to be charged on a commercial basis.
Country-by-country (CbC) reporting regime
Jersey has formally committed to the Organisation for Economic Co-operation and Development (OECD) model of CbC reporting and has already put in place the relevant implementing regulations for entities with accounting periods commencing on or after 1 January 2016. In addition, Jersey has signed up to the Multilateral Competent Authority Agreement (MCAA) to assist with the sharing of relevant information in relation to CbC reporting, as well as broadly adopting the OECD’s CbC reporting implementation package, to facilitate its implementation of this base erosion and profit shifting (BEPS) minimum standard.
Multinationals having global revenues of 750 million euros (EUR) or more are required to file annual reports to tax authorities at three levels. The first element (which taxpayers are generally required to provide for fiscal 2016) is a ‘country-by-country report’ that gives a detailed picture of business results for each country where the business operates (including things like number of employees, revenues, pre-tax profit, and taxes paid). Companies will also need to give an overall picture of their global business, aggregating data from all of the countries where one operates. In addition, companies will be required to report separately to each country where they operate with business and tax information about the local entities and operations in that country.
The disclosure of this business information will be accessible, through automatic information exchanges, to tax authorities wherever they have a presence (subject to certain conditions). Groups will need to consider how to explain their operational purpose of business arrangements, which may include tax advantages.
The deadline for submission of the CbC report to the Jersey tax authority is within 12 months of the end of the accounting period to which it relates.
Where there is no reporting obligation, there is a requirement to notify the Comptroller of Taxes of the name of the entity that is undertaking the reporting and to provide certain other information. An entity must notify the Comptroller by the last day of relevant accounting period if it is a constituent entity.
There are no specific rules in relation to thin capitalisation in Jersey.
Controlled foreign companies (CFCs)
Jersey has no CFC legislation.