Tuesday, January 29, 2013
Responding to the findings of a Scrutiny Panel review of progress towards the new joint Channel Islands Aircraft Registry, Jersey's Minister for Economic Development, Alan Maclean has begun to address the unique selling points the Registry will offer in tax terms.
In discussing the proposed registry, the Scrutiny Panel, which acts as an independent government oversight panel, noted that companies that register aircraft in the Isle of Man are in a unique position which enables them to become registered for value-added tax (VAT), which enables them through corporate ownership structures to claim back VAT on purchases. Jersey is not in such a position, and will need to determine its own unique selling proposition, it pointed out.
Maclean responded that: "The issue of competitive disadvantage to the Isle of Man and other Registries presented by VAT is a challenge, but does not appear to be insurmountable." He pointed out that the Channel Islands Strategic Case report established that, due to the different VAT regimes, it was likely that different clients would be attracted to the Channel Islands Registry than those using the Isle of Man, depending upon their place of business and planned base of activity for their aircraft.
"Discussions are currently ongoing with Economic Development and Guernsey’s Commerce and Employment Department. Officials from both islands are working together to seek to identify the best way to proceed and hope to be able to make an announcement on a final decision very shortly."
He agreed with the Panel's suggestion that allowing the registration of aircraft under fractional ownership could present a viable unique selling point for the Registry and said the governments are considering the option.
Reviewing progress towards the registry, which is expected to be launched this year, Maclean confirmed that it had been agreed between the two governments that due to Guernsey's pro-active leadership in spearheading the development of the necessary legislation, the Registry will be based in Guernsey.
Jersey will benefit from its establishment through an increase in retail sales, and associated financial services and wealth management business, Maclean said.
It was pointed out by the Scrutiny Panel that the announcement of the new partnership agreement between SGI Aviation and the States of Guernsey in May 2012 marked a significant point in the Aircraft Registry project, and the context of Jersey’s role within it. Maclean said that: "Discussions have concluded that it is not insurmountable for Jersey to get up to speed on the project, as much of the legislative changes are the same in both jurisdictions."
Responding to additional feedback from the Scrutiny Panel on the competitive disadvantage Jersey faces in terms of the island's 5% Goods and Services Tax, Maclean said the government was looking at measures to mitigate the potential impact of the island's sales tax on visitor numbers and associated business flows.
Lastly, Maclean confirmed the governments had abandoned immediate plans to jointly develop a Category 1 Shipping Registry, but highlighted there were no barriers to Jersey considering a move to Category 1 in isolation, to establish a Category 1 Channel Islands Registry to be based in Jersey.