Page last updated at 13:08 GMT, Thursday, 15 October 2009 14:08 UK

Tax review 'no cause for concern'

Terry Le Sueur
The Chief Minister said Jersey was committed to meeting tax standards

Fears that Jersey's business tax system does not meet European Union standards should not cause undue alarm, a tax expert has said.

The chief minister said the island's zero-ten scheme may have to be changed after learning it does not meet the latest EU tax code of conduct.

But tax expert John Shenton said it was too early to worry about the review outcome as it would not change quickly.

He said the island did not know yet which areas of the tax were criticised.

Change in thinking

The zero-ten system was introduced last year to ensure Jersey remained competitive as an offshore finance centre.

We need to demonstrate that we are not a conduit for moneylaunderers
John Shenton

It means many businesses based in the island pay no corporation tax.

In a meeting with the secretary for the UK Treasury this week, the chief minister was told zero-ten may fail to meet EU standards.

Senator Terry Le Sueur said the EU had reviewed its thinking on taxes because of the global economic downturn.

Jersey is not a member of the EU, but Mr Le Sueur said he was fully committed to making sure Jersey's tax structures met global standards and will review zero-ten.

Mr Shenton, tax director at Grant Thornton Channel Islands Limited, said: "I don't think we ought to be worried at all."

Educate the EU

"I think we will always keep our fiscal policies under review and we have to remain competitive."

He said the details about why zero-ten did not meet the EU code were vague.

"We don't know which parts of it they don't like, we don't know whether they have taken a disliking to all of it.

"Nothing will happen overnight. We need to know who is making the noise they do not like it," Mr Shenton told BBC Jersey.

He said it may just be a case that Jersey needed to educate the EU on exactly how the island's tax systems worked.

"I think we have to explain to them where our position is and how our economy is based.

"Demonstrate to them that we are not a conduit for moneylaunderers, we are a conduit for people who are doing legitimate business," he added.

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