Guernsey Anxious Over UK Budget Impact on Holding Companies

by Carla Johnson, Investors Offshore.com

10 April 2003

Guernsey's finance centre was anxiously awaiting UK Chancellor, Gordon Brown's budget speech yesterday, according to a report from the Guernsey Press and Star.

Speaking earlier this week, KPMG managing partner, Jonathon Hooley suggested that: 'The item that most people will be looking at is any announcement about residence and domicile.'

This area has attracted such close scrutiny from the Island's finance community because any changes are likely to affect Guernsey registered holding companies owned by people who are resident but not domiciled in the UK, a key business area for the IOFC.

'It is an area of legitimate tax planning and part of the finance industry's business here,' Mr Hooley explained to the local newspaper.

As expected, Gordon Brown announced in his budget that the government has published a consultation document on the issue of tax residence: 'reviewing the residence and domicile rules as they affect the taxation of individuals, which takes forward continuing work in this area'.

According to Mr Brown's budget report:

'The paper describes the current rules and their historical perspective, analyses international experience, and develops the principles that the government believes should underpin any modernisation of the system.'

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