More Time Allowed For First Zero-10 Returns
Guernsey's Income Tax Office announced this week that it is giving companies more time to make first reports on taxable distributions of profits to shareholders. Under the new zero-10 tax system, locally-resident shareholders of Guernsey companies will pay tax at 20% on distributions, and, in some cases, when certain events trigger a deemed distribution. In addition, loans to participators in a company, and connected persons, will also give rise to a tax charge for the first time. Companies are responsible for notifying the tax office of the relevant transactions made each quarter. The Treasury and Resources Department has agreed to allow Administrator Ken Forman to delay the start of the reporting regime. "We have had accountants telling us that the change to zero-10 has had a big impact on their workloads," explained Mr Forman. "We thought that by deferring the first quarter reports until the end of June, we would give local companies more time to get used to and understand the system." "This deferment is expected to have very little impact on States cash flow. We never envisaged that returns for the first quarter of 2008 would generate material revenue sums," he added. An integral part of the zero-10 regime will be the quarterly reporting requirement that companies will have in connection with distributions, deemed distributions and qualifying loans. Companies will be required to report details showing to whom the distributions/ deemed distributions/qualifying loans have been made, and to deduct and pay over the appropriate amount of tax. The zero-10 regime commenced on 1 January 2008, and the first reporting obligation should have been by 15 April in respect of the quarter ending 31 March 2008. The Income Tax Office will now receive returns for the quarters ending 31 March and 30 June 2008 by 15 July 2008. The Income Tax Office wants forms to be submitted electronically, which will reduce the resources that it needs to process the information, and intends to help companies to do this by supplying a free CD including the necessary software to all companies requiring it. The Office is also updating its own computer systems as part of the many changes it has introduced for the zero-10 regime. .
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