Jersey
Geography
Jersey
is situated off the north-west coast of
France in the English Channel. It is the
largest and most southerly of the Channel
Islands with an approximate area of 45
sq miles. The nearest part of the French
coast lies 14 miles to the east in Normandy
while 85 miles to the north is Weymouth
on the English coast. Touristically, the
island is best known for its sandy beaches
in the south and west and high cliffs
in the north. Much of the land is used
for agriculture. There are plenty of scenic
walks with a variety of wildlife. The
climate is moderate; Jersey is the sunniest
part of the British Isles with an average
1,915.0 hours of sunshine each year for
the period 1961 to 1990.
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Jersey Population Language and Culture
Jersey
has a population of 91,321 (July 2007 est.).
English and French are both official languages
and used widely. In the country areas a
Norman-French dialect is spoken. The capital,
St Helier lies on the island's southern
cape within one hour's flying time of London
and Paris; there are frequent flights to
a number of UK and Continental destinations.
Prior
to the Norman Conquest the Channel Islands
formed part of the territory belonging to
the Duchy of Normandy. In 1204 when Normandy
was freed from English rule the islands
retained their allegiance to the King of
England. Successive English monarchs have
ruled the Islands through their claim to
the Duchy of Normandy but have observed
the Islands' established laws and customs.
Royal charters have confirmed the independence
of the Islands' judicial systems and administration,
the right to tariff-free trade with England
and freedom from English taxes.
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Jersey
Relationship with the EU
Jersey
is not a member of the EU. Protocol No 3
of the UK's Treaty of Accession to the UK
excludes the island from most of the effects
of the Treaty, other than those concerning
trade in goods.
There
is free movement of industrial and certain
agricultural goods between the island and
the UK according to historic Charter rights;
and between the island and EEA countries
except for some sensitive products. The
island applies the external common customs
tariff of the EU.
EU
(and hence UK) VAT does not apply to Jersey.
Jersey's
constitutional position in relation to the
EU cannot be changed without unanimous agreement
of the member states, including of course
the UK, which by long-established convention
does not legislate in regard to Jersey without
prior consultation.
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Jersey Government
The
Channel Islands consist of two 'bailiwicks',
Jersey and Guernsey, and there are no constitutional
links as such between the two. Jersey is
a British Crown dependency. The Queen of
England is the head of state and represented
by a lieutenant governor. The United Kingdom
is responsible for its defence and external
relations but by long established constitutional
convention it is self-governing in matters
of domestic policy. The island has its own
legislative assembly, the States of Jersey,
and a comprehensive independent legal, fiscal
and administrative system. The power to
appoint certain local administrators is
vested with the Crown; and with certain
minor exceptions, legislation passed by
the island's assembly must be validated
by the UK Privy Council - normally this
is just a formality.
The
States of Jersey is a unicameral, directly
elected body and there are no party politics.
Apart from the few senior offices in the
gift of the Crown, most executive powers
are administered by committees of the States.
This provides for direct, effective administration,
but may be short on checks and balances.
However, over many years the States has
aimed at creating a well-regulated, efficient
financial centre with up-to-date legal,
judicial and regulatory frameworks. Broadly,
it seems to have succeeded: in 1998 the
UK Government carried out a review of the
island's financial regulatory regime with
generally positive results (see The Edwards Report). The Government
department which previously regulated the
finance sector was reborn in 1998 as the
Financial Services Commission, which now
operates as an independent regulatory agency.
To some extent this change was a response
to isolated financial scandals which had
threatened the island's generally good reputation.
The
island is not directly represented in the
United Kingdom Parliament. By convention
Parliament does not legislate for the island
without its consent in matters of taxation
or on local issues. The Island's assembly
is consulted before any international agreement
is reached which would affect it.
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Jersey The Edwards Report
In
1998 the British Government announced that
there would be a review of financial regulation
and structure in Jersey, Guernsey and the
Isle of Man. The review was carried out
by Anthony Edwards, a former senior Treasury
civil servant, and was published in November,
1998. Saying that 'the islands are in the
top division of offshore centres' Mr Edwards
gave the islands a generally satisfactory
report, making 154 recommendations that
applied to Jersey. The great majority of
these covered matters that were already
in the legislative pipeline or were readily
agreed to by the administration. Some recommendations
however were more contentious for the island.
The
difficult recommendations were:
- That
the Financial Services Commission should
have powers to prosecute and to 'name
and shame'
- That
all limited companies and limited partnerships
should file accounts
- That
trustees should be obliged to make proper
disclosures to beneficiaries
- That
trustees should waive self-incrimination
privileges
The
administration's initial replies amounted
to qualified refusal of these recommendations,
largely based on the existence of common
law safeguards and in defence of confidentiality,
but subsequent pressure from the FATF and
the OECD, together with the consequences
of the September terrorist attacks in the
US have led to a considerable tightening
up.
In
2001, for instance, the jurisdiction introduced
a law obliging trust and company service
providers to obtain an operating license
from the Financial Services Commission,
in much the same way as banks and investment
funds have always been obliged to. This
license commits the organisation to record
the beneficiaries of all assets handled,
provide adequate anti-money laundering training
for staff, and report all suspicious transactions
to the authorities.
Jersey's
standards of anti-money laundering regulation
have in fact been the subject of favourable
international comment, and the G7 Financial
Stability Working Group on offshore centres
places Jersey in Group 1 - those which meet
international standards of financial regulation
and international co-operation.
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Jersey Economy and Currency
The
economy is stable and is based largely on
financial services, agriculture and tourism;
of these, financial services is dominant,
accounting for more than half of gross domestic
product. The island has a balance of payments
surplus, without external debt, and has
very low unemployment at 2.2% (2006 est.).
The finance sector is dominated by banking,
fund management and trust management.
The
Jersey Financial Services Commission's quarterly
report for the period to 30th September
2007 shows that almost 50 banks held bank
deposits of GBP219.5 billion.
Funds
domiciled on the island stood at GBP221
billion, having recovered from a dip in
2001-2002. The Financial Services Commission
estimates that 30% of the top 500 European
companies and over 10% of the top 700 Asian-Pacific
companies use Jersey's financial facilities.
The Government has also encouraged development
of light industry, and there is significant
activity in the electronics sector.
GDP
was an estimated US$5.1 billion in 2005,
and GDP per head was US$57,000.
The
Jersey currency is the pound which is on
a par with the British pound; there are
no exchange controls.
Nearly
100,000 companies are registered in Jersey,
with many more foreign companies administered
from the island.
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Jersey
The Channel Islands Stock Exchange
The
Channel Islands Stock Exchange ("CISX")
commenced operations on 27 October, 1998
with 23 founder members. Its aim is to provide
trading and listing of investment funds,
debt instruments and shares in companies
and to bring the expertise available in
the Channel Islands to the expanding network
of international businesses requiring expert
offshore financial services in the European
time-zone. Ownership of the CISX lies in
the hands of its listing members, who have
to be established in the Channel Islands.
Management and control are vested in a board
of directors who are elected. Based in St
Peter Port, Guernsey, the CISX provides
a listing facility and screen-based trading.
Trading members do not have to be established
in the Channel Islands, but must be licensed,
regulated or supervised by a regulatory
body in a jurisdiction recognised by the
CISX. In August 2007 the exchange welcomed
its 50th member.
The exchange has developed specialist niches
in floating property funds, open and closed-ended
investment funds, debt, securities and special
purpose vehicles and is attracting increasing
interest from alternative investment funds.
The CISX also lists international trading
companies and not just those based in Guernsey.
The
2,000th listing on the exchange occurred
on April 16, 2007, when Isle of Man collective
investment fund Lansdown Atlantic Life Settlement
Fund was admitted to the Official List.
In
an endeavour to secure the financial stability
of the stock exchange and promote its further
development, the CISX is offering its own
shares for sale. Shares are available through
underwriters LCF Rothschild (CI) Ltd.
In
September, 2002, the US Securities and Exchange
Commission's awarded the Channel Islands
Stock Exchange (CISX) designated offshore
securities market status. In December, 2003,
the CISX gained approval by the UK Financial
Services Authority as a Designated Investment
Exchange.
Although
the CISX is as open to listings from Jersey
as from within Guernsey, in practice the
Exchange trades four times as many Guernsey-domiciled
securities as those from Jersey. The exchange
said in 2004 that it was trying to remedy
this imbalance; it is also promoting several
new product areas, including eurobonds and
structured funds.
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Jersey Entry and Residence
Nationals
of European Union member states have free
right of movement in Jersey for the purposes
of work and establishment. Non EU nationals
must apply to the States Defense Committee
of the Aliens Office for permission to reside
or work in Jersey. Generally a work permit
will be granted only if no suitably qualified
local exists. Preference is given to UK
and other European Union nationals. Long-term
residency in Jersey is carefully controlled;
with certain exceptions consent for residency
will be given only to a person owning a
residence, and in turn the purchase of a
residence is subject to consent, which is
given in only a limited number of cases,
usually involving a luxury dwelling or an
individual who is clearly going to contribute
significantly to the island through payment
of local taxes.
On
the other hand, consent is usually granted
quite readily for commercial property transactions.
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Jersey
Business Environment
In
terms of business and communications infrastructure,
Jersey offers Western European standards.
The business environment is particularly
well-attuned to the finance sector as a
result of the island's long-term policy
of promoting itself as an international
finance centre, accompanied by a well-developed
regulatory structure, and careful supervision
of incoming finance-sector businesses in
order to screen out doubtful operations.
Jersey's
political stability, low taxes and international
credibility make it an attractive place
in which to do business. However, in order
to protect limited local resources, the
administration does not welcome foreign-owned
businesses unless they will clearly contribute
to the diversity or quality of the services
available on the island. The Finance and
Economics Committee issues licenses to commence
business on the island under the Regulation
of Undertakings and Development Laws 1973
and 1975. Restrictions on numbers of employees
and the controls on residential accommodation
are further ways in which the administration
limits business expansion. These rules are
not applied to exempt or non-resident companies,
which are permitted to hold board meetings
on the island and to have some fairly minimal
administrative activities there.
By
2001, restrictive housing policies had begun
to act as a serious brake on business activity,
and in January 2002 the Housing Committee
of the States of Jersey published a long-deferred
major strategic policy report for 2002-2006,
in which it called for sites for more than
1,100 new homes to be zoned in the first
five years of the new Island Plan.
Currently
the Island Plan includes provision for only
750 new homes, but the Committee says the
larger number will allow them to provide
500 rental and 600 first-time buyer homes.
Even so, says the Committee the real shortfall
in homes is probably as high as 1,450 -
but it thinks that development of the additional
sites could be phased over a longer period
than five years, thus reducing pressure
on the construction industry. Alongside
this more extended programme, it would be
beneficial to create a ‘residential
land bank’.
"Restricting
too tightly the supply of land will only
have the effect of increasing land values
and will ensure that any newly-rezoned sites
continue to be the subject of intense speculation,"
warn the committee.
Pressure
on the availability and price of houses
continues to be one of the major constraints
on development of the island's business
community, with incoming managers and specialists
facing dramatic restrictions on their ability
to find reasonably priced accommodation,
in the face of a rabidly 'NIMBY' (not in
my back yard) existing population. Several
banks which have relocated to the Isle of
Man recently said that pressure on staff
and property costs in Jersey had influenced
their decisions.
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Jersey Import of Foreign Capital
There
is no exchange control in Jersey. Jersey
companies may be freely incorporated with
a share capital denominated in any currency
and there are no restrictions on inward
or outward investment or on the repatriation
of dividends, interest and profits. Bank
interest on deposit payable to nonresidents
is exempt from Jersey income tax. Royalties
are treated for the purposes of tax in the
same way as interest.
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Jersey Investments by foreigners
The
authorities deter "active" foreign investment
(new businesses and permanent immigration)
but welcome "passive" investment (purchase
of real estate for investment purposes,
or the purchase of existing business assets).
This is part of the administration's general
policy of protecting the island's scarce
resources. Therefore the island does not
offer investment incentives, other than
its permissive tax regime as such.
It
became clear in May 2002 however that Jersey,
along with its fellow UK dependent territories
Guernsey and the Isle of Man, would agree
to be part of the EU's information-sharing
regime, the Savings Tax Directive, whereby
financial institutions will be obliged to
pass details of income on investments by
nationals of EU member states to their home
tax administrations. The EU introduced this
information-sharing on 1 July 2005, although
Jersey along with Guernsey, the Isle of
Man, Austria, Belgium, and a host of 'third
countries' including Switzerland, decided
instead to opt for a withholding tax on
interest income which applies initially
at a rate of 15%.
