E-Commerce and E-Gaming: Jersey Focus
By Offshore-E-Com Editorial
In the search to find the most suitable offshore base for e-commerce or e-gaming operations, the island of Jersey is often overlooked in preference to neighbouring Channel Island Guernsey or fellow UK Crown Dependency the Isle of Man, both of which are at the forefront of the remote gaming industry. All this might be about to change however, as the Jersey Government begins to put in place the necessary ingredients to allow the industry to grow.
There can be no doubt that Jersey has the infrastructure and facilities to support a substantial e-commerce industry. Multiple off-island, high capacity optical submarine cables connect the island directly with the UK and France and from there, onward connection to the rest of the world. Several operators provide Internet backbone services ensuring that connectivity is easily achieved and very rarely disrupted.
Recently, the island embarked on a ‘fibre-to-the-home’ project known as Gigabit Jersey. This pioneering program is set to transform communications in Jersey by bringing super-fast broadband to every home and business in the island over the next three to five years. Gigabit Jersey will enable all users to access the Internet at speeds of up to 1GB, which will be the fastest for a residential network in the western world.
Gigabit Jersey will be a single, ubiquitous access network delivering a Gigabit+ optical service to 100% of Jersey households. It will support and deliver cutting-edge services and applications, such as ultra-high Definition TV and high-growth community-based applications. Once fully installed, the island will offer the ideal test environment for companies wanting to trial online products and services.
Jersey is also equipped for wireless broadband, and on June 1, 2006, Jersey Telecom launched the Island’s first 3G mobile service as part of a GBP12m investment programme to upgrade its ‘core’ mobile network to bring customers the very latest in mobile voice and data services.
3G mobile technology is essentially ‘broadband’ for mobile devices and allows users to transfer data at speeds that rival a fixed line broadband connection. This means that customers can access a whole new set of services while on the move, including person-to-person video calling and high speed mobile internet access.
In addition to suitable physical infrastructure, Jersey also has the necessary legislative framework to allow e-commerce operations to take root.
The Electronic Communications (Jersey) Law 2000 entered into force on the January 1, 2001 and was promoted by the Jersey Information Society Commission as a suitable environment for the conduct of e-business. The Law covers the following:
- Legal certainty in respect of certain aspects of electronic transactions; Default rules governing electronic contracts have been included as a fall back and can be varied by the parties. These default rules specify, for example, the time of dispatch of an electronic communication. In the absence of a clear agreement between contracting parties, these rules are important in deciding when and where an electronic contract was concluded. Electronic contracts are given legal recognition;
- The admissibility into evidence of information in electronic form (including electronic transactions, electronic records and electronic signatures authenticating such communications or records);
- The removal of obstacles in other legislation to the use of electronic communications and storage in place of paper;
- Flexibility in application and approach provided by Regulations made by the States, Orders made by the Industries Committee and by Rules of Court.
Protection is provided for ISPs in the form of defences to civil and criminal actions.
The island’s telecommunication market is now also liberalized after the Government began the process of finding a buyer for Jersey Telecom in 2006, which at that point was one of the only 100% state-owned telecommunications providers in the world. There is now a fairly competitive market for the provision of high-speed internet, with four internet service providers operating in the island, including JT Global (formerly Jersey Telecom), Newtel, Sure and Y-Tel.
As part of its policy of liberalisation of Jersey’s telecommunications sector, the Government has established an independent regulator and adopted the UK regulatory and licencing model. These initiatives are reflected in the Telecommunications (Jersey) Law 2002, which was registered on January 4, 2002.
A central purpose of the Law was to abolish the formerly exclusive privilege of the States of Jersey in the telecommunications sector, and to introduce competition in both fixed and mobile telephony. The Law requires providers to hold a licence issued by the Jersey Competition Regulation Authority (JCRA) to operate a telecommunications service in Jersey, and currently the JCRA issues three classes of licences, depending on the operator’s market power. Alternatively, a General Class Licence may apply.
Jersey's economic policy encourages information technology operations, in line with the current strategy of business growth without population growth. However, the development of an e-commerce cluster in the jurisdiction has perhaps been hampered by the lack of a coherent strategy to promote and grow the industry.
The Jersey Information Society Commission, which was the focus of development work in 2000 and 2001, ceased to exist in early 2002. Work on e-commerce development then passed to the States' Industry and Commerce Committee before becoming the responsibility of the newly-created Technology, Media & Telecommunications Policy Unit, also known as the TMT Policy Unit in January 2003.
After what was described as a "very successful" strategy meeting in May 2004, the TMT Group committed itself to bringing forward a series of recommendations designed to more fully develop the opportunities offered by e-commerce. According to the TMT Group, the States' decision to adopt the Strategic Plan 2005-2010 was intended to provide a framework upon which policy can be developed in a cohesive manner, and this led to departments drafting new business plans outlining how each aims to deliver the tasks they have been allocated. The business plan for Economic Development included the development of an e-commerce strategy as one strand of its core objective of stimulating 2% per annum real growth in the local economy.
The Government hopes that industry development has been put on a more stable footing with the launch of a new independent organization to represent and promote the island as a centre for digital businesses in areas such as e-commerce, information and communications technology services and data hosting.
Known as Digital Jersey, this agency will work with the government and the private sector to aid understanding of the digital economy and the opportunities it could open up for Jersey in this area. It will work on developing relevant education and skills, promoting legislative guidance and providing strategic direction. Although initially funded by government, Digital Jersey will remain wholly independent and will seek external sources of funding in the future.
Governance of Digital Jersey will be through an independent board, with candidates to fill management roles now being sought.
The Jersey government has welcomed the formation of Digital Jersey and Minister for Economic Development, Senator Alan Maclean, commented: “I am very pleased that the recruitment of the Chair for Digital Jersey is about to commence. Recruitment for the CEO will begin shortly, and the remainder of the Board will be put in place as quickly as possible."
“We are looking for progressive, dynamic people with expertise and interest in the digital industry who will contribute to the development of an effective strategy for the growth of this whole sector in Jersey,” Maclean added.
Intellectual Property Law Reforms
The Government of Jersey is also hoping that modernisation of its intellectual property laws will drive growth in the island’s digital industries.
The public and the industry were consulted on three proposed intellectual property laws in 2007 – 2008, including the following:
- the draft Copyright (Jersey) Law 200-, which dealt with the right of the author, composer, artist or creator of an original work to prevent another from copying it;
- the draft Design Right (Jersey) Law 200-, dealing with the right of the designer to prevent others from reproducing the design; and
- the draft Performers’ Protection (Jersey) Law 200-, dealing with the right of the performer to prevent another from copying, recording, or broadcasting performances.
“Updating our copyright laws is a key driver to diversifying Jersey's economy for the future,” wrote Phillip Ozouf, then Minister for Economic Development, in the covering letter for the consultation. “The creation of a vibrant e-business sector, underpinned by robust intellectual property legislation, will create a new sector, boost economic growth and create new jobs.”
“The draft Laws have been designed to position Jersey to compete for business in global markets, and need to achieve certain standards,” Ozouf added. “As such any changes to the current drafts would be made only if there were very good reasons for doing so. However, before the Laws are presented to the States, I am inviting the public to comment on the drafts to raise any important issues that should be taken into account.”
This process culminated in a new law governing copyright and other unregistered intellectual property rights, which came into force on December 18, 2012. The new law, the Intellectual Property (Unregistered Rights) (Jersey) Law 2011, ensures that there is good protection for works such as books, films, CDs and video games. The new law also deals more fairly with use of works by, for example, libraries or schools.
Meanwhile, work is ongoing to update other intellectual property laws, including those that can protect inventions and brands created by Islanders and local businesses.
The Government believes that the new intellectual property legislation will make Jersey a more attractive place for new businesses.
“Opportunities arising from the development of Jersey’s intellectual property laws, particularly when linked to e-commerce, are seen as a major potential contributor to Jersey’s economy in the future,” it said. “The development of intellectual property law is therefore a high priority for economic development. A modern, effective and fair legislative framework is important not only to the individuals and businesses that create intellectual property but also to the service industries that support such businesses.”
The modernisation of Jersey’s intellectual property legislation also means that the jurisdiction will achieve compliance with international conventions and agreements in the relevant areas. The new law on copyright and related rights means that Jersey can seek extension of the Berne and Rome Conventions, and the WIPO Copyright, and Performances and Phonograms Treaties to the Island. Compliance with the Trade Related Aspects of Intellectual Property Rights Agreement (TRIPS), which is administered by the World Trade Organisation, and the Paris Convention for the Protection of Industrial Property will be achieved when the other updates to Jersey’s intellectual property laws mentioned above are completed.
As stated in our introduction, Jersey is not considered as one of the world’s major remote gaming domiciles, at least not yet. This is largely because its outdated gambling legislation did not create the ideal conditions for remote gambling operations, and while peer jurisdictions like Guernsey and the Isle of Man have had the necessary legislation in place for a number of years, Jersey has come late to the party.
The Gambling (Remote Gambling Disaster Recovery) (Jersey) Regulations 2008 were the first step in the legislative programme of modernisation of Jersey's gambling laws, and represented the first 'new' gambling regulations to be passed by the States Assembly (the Island's parliament) in 42 years.
The new regulations came into force on January 22, 2008, and allow companies who are licensed to operate remote gambling services in other jurisdictions to place their disaster recovery, or backup systems, in Jersey and, in the event of disaster, operate temporarily from Jersey.
The year 2010 saw an overhaul of the regulatory framework for gambling in Jersey. The Jersey Gambling Commission was created by the Gambling Commission (Jersey) Law 2010 which came into force in October 2010. This law transferred all responsibilities for licensing, registration and regulation of gambling prescribed as the duty of the Minister, the former Licensing Assembly or other States bodies to the new Authority. The Law introduced a set of Guiding Principles which the Commission must have regard to in the performance of all its functions. These principles include that gambling services should:
- be conducted responsibly and with safeguards necessary to protect children and vulnerable people;
- be regulated in accordance with generally accepted international standards to prevent fraud and money laundering, and should not be permitted to be a source of crime; and
- be verifiably fair to consumers of those services.
These principles also consolidate those governing tenets of the Commission which are to ensure Jersey retains its excellent international reputation as a well-regulated jurisdiction and, while encouraging business growth, assure potential harm is minimised and programmes are introduced to protect the young and the vulnerable. In respect of the latter objective, the Commission has appointed a Social Responsibility Panel to provide advice and support. The Law requires the Commission to create a social responsibility fund, accounted for separately from its other funds and used solely for its responsible gambling function. This fund is financed by voluntary donation but also makes provision for raising a social responsibility levy on gambling service providers.
The Commission has a general duty to promote good practice and observance of the law on gambling, and enables the Commission to issue or approve codes of practice (including technical standards). Importantly, the law sets out the framework whereby the Commission may co-operate with overseas authorities performing similar functions or prosecuting offences relating to gambling. It enables the Commission to exercise approved powers in Jersey, on a request from an overseas authority, even though no legislation has been contravened in Jersey and even though there will be no direct benefit to the Commission’s own functions. The Commission can take account of whether the assistance is likely to be reciprocated, and must be satisfied that the request is for legitimate purposes. In 2012, memorandums of understanding where signed with two foreign gambling regulators, including the Danish Gambling Authority and the Malta Lotteries and Gaming Authority.
A major stride towards Jersey’s goal of becoming an established remote gambling jurisdiction was taken in 2012, when the Gambling (Jersey) Law 2012 was signed off in March of that year. Effective from January 1, 2013, the new law replaced existing gambling legislation dating back to 1964 with a more permissive regime. Principally, the new law differentiates between different types of providers of gambling services instead of different forms of gambling and frees individuals from supervision when it comes to gambling within their own homes. However, commercial operations are strictly overseen and authorised by the JGC. The new law also provides the Gambling Commission with extra powers to issue directions and revoke licences without going to court. In addition, the law permits the use of civil financial penalties in cases where licence conditions have been breached.
The explanatory notes to the 2012 law state that: “Development of gambling services and particularly remote gambling still represent an enormous opportunity for industry by way of investment and upgrading of the island’s communications infrastructure. Encouraging that segment of the industry to move to Jersey will inevitably reduce the economic risk posed by the current fragile world climate and will encourage other businesses and offer new and diverse employment opportunities.”
Commenting on the introduction of the new legislation, Dr Jason Lane, chief executive of the Jersey Gambling Commission, said: "This new legislation is the culmination of eight years continuous reform and learning. Jersey now has a future-proof law and can adapt its licensing regime to meet the demands of a highly creative and adaptive industry. I think being able to set our conditions to reflect business realities, rather than legislative categories, will make Jersey a growing jurisdiction of choice for e-gaming business and more widely."
A significant endorsement of the Island’s nascent e-gaming strategy by the industry occurred in January 2012 when the Jersey Gambling Commission received the application of Playtech, one of the world's leading e-gaming software and content specialists, for a Remote Gambling licence.
The decision by Playtech to apply for a Jersey licence followed months of talks between Jersey Enterprise, the Gambling Commission, and the company itself. This included meetings with Playtech’s Chief Executive Mor Weizer during a Jersey business delegation visit to Israel in May 2011.
Jersey's Economic Development Minister Alan Maclean said: “I see this licence application from a market leader like Playtech as a stamp of approval for Jersey’s new e-gaming industry. It demonstrates how we can leverage Jersey’s long-standing reputation for excellent regulation, infrastructure and world class professional services by developing exciting new opportunities for our economy from the lucrative global e-gaming market.”
Weizer added: "We are delighted to be seeking an operating licence in Jersey. We met last year with the Jersey authorities in Israel who convinced us of the merits of the new licencing regime and their commitment to the sector. With many of our existing licensees having operations in the Channel Islands it makes good sense for us to seek a licence in Jersey to support our customers from a regulated jurisdiction with a first-class infrastructure."
Like Guernsey and the Isle of Man, Jersey also has a very attractive tax regime, and the only significant tax is income tax.
A ‘zero/ten’ tax system for companies has applied from 2009. This was achieved by introducing a standard rate of corporate income tax of 0%, and a special rate of 10% for specified financial services companies, into the Island’s existing schedular tax system. Utility companies, rental income and property development profits continue to be charged at the standard income tax rate of 20%.
There is no capital gains tax, capital transfer tax or purchase tax in Jersey. The States agreed to introduce a broad-based, 3% Goods and Services Tax (GST) in 2008, with a registration threshold set at GBP300,000 of taxable turnover. This rate increased to 5% from June 1, 2011.
There are stamp duties on the transfer of immovable property (up to 5%) and individual parishes levy property taxes.
A great deal of helpful information on all aspects of taxation in Jersey can be found on our partner website, www.lowtax.net.
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