Enveloped Property Transactions Tax

Scrutiny review - Corporate Services Panel

Launch date: 06/01/2022

Review status: Call for evidence

What is the review about?

The Minister for Treasury and Resource lodged the Draft Taxation (Enveloped Property Transactions) (Jersey) Law 202- [P.119/2021] (the Draft Law) on 21 December 2021. Earlier drafts of this proposition had been forwarded to the Corporate Services Scrutiny Panel (the Panel), in March and November 2021, with the Panel receiving a briefing on the updated drafts in July and November 2021.

If adopted the Draft Law will introduce an Enveloped Property Transactions Tax to relevant transactions where:

  • The entity, or any entity over which it has control, is the beneficial owner of the enveloped property; and

  • The transferor (owner) of the entity transfers to a person (the transferee) a "significant interest" in the entity.

A "significant interest" is defined as more than 50% of the interest in the entity. For example, a company transfers a significant interest if it transfers more than 50% of its shares. Schedule 1 of the Draft Law stipulates specific exemptions from Enveloped Property Transactions Tax, this schedule will be able to be amended by regulation. Exemptions include:

  • Devolution of an estate (essentially the winding-up of an estate);

  • Any transactions that take place by order of the court, such as during divorce proceedings;

  • The transferee is a tax exempt charity;

  • The transferee is a tax exempt Social Housing Company;

  • The transferee is a Minister, or one of the Parishes; and

  • Transactions where the beneficial owner of the property remains the same

Enveloped Property Transaction Tax will be imposed where the land has a market value exceeding £700,000 for commercial properties and £500,000 for residential properties. This will be calculated using market value bands, mirroring those used for Stamp Duty and Land Transaction Tax (LTT).

P.119/2021 will also amend the LTT Law (Taxation (Land Transactions) (Jersey) Law 2009) expanding the scope to include relevant transactions of commercial properties by share transfer. Further amendments are proposed to the Companies (Jersey) Law 1991 to require receipt relating to relevant transactions to be provided in line with the Draft Law and the Revenue Administration (Jersey) Law 2019 which are consequential on the new provision of EPTT.

Review progress

The Panel is currently carrying out scrutiny of P.119/2021. In addition to holding a public hearing with the Minister for Treasury and Resources, the Panel has issued a general call for evidence to gain the views of the public. The Panel would like to receive the views of the public and stakeholder on the topic, particularly:

  • What is the economic and distributional impact of the Draft Law?

  • How will the Enveloped Property Transactions Tax be imposed and administered?

  • What right and process of appeal will be available?

  • Is the Draft Law sufficiently robust to deter avoidance?

  • Are there any additional resource requirement of Revenue Jersey?

  • Is the Enveloped Property Transactions Tax in keeping with the mantra of maintaining low, broad, simple and fair taxes?

The Panel ask that any evidence is submitted by the 28th January 2022. You can get involved through the following methods:

  • Completing the 'Get involved' form on the States Assembly website;

  • Emailing scrutiny@gov.je; or

  • By letter: Scrutiny Office, Morier House, St. Helier, JE1 1DD.

For more information, see the full call for evidence document attached at the end of this page.

Terms of reference

  1. To undertake scrutiny of the proposition P.119/2021 - Draft Taxation (Enveloped Property Transactions) (Jersey) Law 202-;

  2. To explore the economic impact of the Enveloped Property Transactions Tax;

  3. To examine the powers afforded to the Minister for Treasury and Resources and Comptroller of Revenue by P.119/2021;

  4. To ascertain the impact of the implementation of the Enveloped Property Transactions Tax on the resources of Revenue Jersey;

  5. To appraise the fairness of the ability to appeal; and,

  6. To deliver a comments paper to the States Assembly.

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