As far as Personal Income Tax system in Jersey is concerned, it can be seen that for individuals who are residents and ordinarily residents in Jersey, personal income tax is applied on the worldwide income. In other words, it can be seen that for residents and ordinarily residents in Jersey, global income is used as a criteria for tax related calculation.
For individuals that are residents of Jersey, but not ordinarily residents only Jersey-source income is used, whereas the other global income is subject to tax only to the extent that it is received in Jersey.
For individuals that are not residents of Jersey, they are liable on their Jersey-sourced income only. However, there are certain exemptions, including bank interest earned, or interest that is received from a company that has a resident status in Jersey.
Personal Income Tax Rates in Jersey
Personal Income is taxed in Jersey at a rate of 20%, after deducting all the respective allowances.
Alternative Tax Calculation
There are also alternative means of computation of tax liability, which essentially lies on the realms of marginal rate subject to the discretion of the tax authorities. In order to calculate the applicable marginal rate, the exemption threshold is duly subtracted from the taxpayer’s income, in addition to any relevant additions that are made to the exemption limit. The balancing (or the remaining figure) is then used to compute the tax liability.
The applicable marginal tax rate is 26%. However, overall tax is based on the lower of the two: the amount of tax payable at the 20% rate, and the tax that has been calculated using the marginal rate.
Other Personal Taxes in Jersey
There are several other personal taxes that are levied in Jersey. They include the following:
- Consumption Taxes: There is a consumption tax that is levied in the form of goods and service tax (GST), at a rate of 5%.
- Social Security Combinations: Employees are also subject to social security contributions that are levied at a rate of 6% on the gross earnings. This is up to the threshold set at an earnings limit of GBP 4,610. For self-employed contributors, they have to pay a rate of 12.5% up to standard earnings limit.
Apart from this, there are no wealth, or property related taxes in Jersey. Similarly, there is no inheritance tax in Jersey.
Corporate Income Taxation in Jersey
In Jersey, resident companies are normally taxed on their global (or worldwide) income. On the other hand, Permanent Establishment (PE) in Jersey is taxed on the income that is directly attributable to the Permanent Establishment. Lastly, as far as non-resident companies are concerned, they are taxed on the real estate income in Jersey.
Companies in this regard are liable to pay income tax at different rates. These rates can be levied at 0%, 10%, or 20% on taxable income. The general rate across most industry types is 0%. The exceptional 10% or 20% rates are applicable on specific companies. The tax rate is applicable to the company on the profits that they have earned over the financial year.
However, there is an exception in the case of Jersey-sourced real estate income. In that case, it is taxed at 20% regardless of the classification of the real property holding company. Companies that have their main line of business as oil imports and supplies are also taxed at a rate of 20%.
On the other hand, the 10% rate is levied on Jersey financial service companies.
Other considerations in Corporate Income Taxation
There are a couple of other considerations that need to be accounted for, primarily on the grounds of ensuring that companies are facilitated with regards to their tax liability in the given year. These specifications are given below:
- For large corporate retailers, the Corporate Income Tax Rate is applicable at a rate of 20%. A large corporate retailer is defined as an entity that has 60% of its trading turnover resulting from retail sales (primarily to customers in Jersey). Likewise, this turnover should ideally amount to GBP 2 Million.
- In the case where taxable profits amount to GBP 500,000, the 20% rate no longer holds. In fact, the company is then subject to tax at a rate of 0% on all the profit taxes.
- If the taxable profits of the corporation amount to GBP 750,000, in that case the company is subject to tax at 20% of the profits earned.
- A tapering provision applies when taxable profits of the retailer range between GBP 500,000 and GBP 750,000 per annum, the tax rate is duly adjusted. Depending on the volume of profits, the effective tax rate is scaled between a 0% and 20%.
In exception to the corporate income tax that is administered by Jersey, there are no local or provincial taxes levied on income.
Other Corporate Taxation in Jersey
As mentioned earlier, there is a consumption tax levied in the form of Goods and Service tax, at a rate of 5%. All those companies are required to register for GST that have taxable supplies of more than GBP 300,000.
However, an International Status Entity (ISE) has been introduced in order to address the issue of complexity involved with irrecoverable income tax, as well as associated administrative costs of GST for exporters. If entities fall under the stipulated criteria, they are exempted for filing GST, and all the services that they offer are declared to be zero-rated.
Custom Duties: Custom Duties are mostly levied on imported goods and services, which are procured outside of the EU or the UK. Similarly, excise duty is also payable on all luxury imported items like tobacco, alcohol and fuel.
Social Security Contributions: Employers are also supposed to bear social security contributions at a rate of 6.5% on all the gross earnings up till the monthly standards earnings limit of GBP 4610.