Guernsey Bankers Favour Withholding Tax On Non-Resident Personal Accounts

by Robert Lee, Tax-News.com, London

29 January 2003

According to a report from the Guernsey Press and Star yesterday, following the EU's recently announced agreement on the taxation of non-resident savings interest, the general consensus in Guernsey's finance centre appears to be that the imposition of a withholding tax is the better option.

In a Council of Europe document published after the Ecofin meeting, it was announced that: 'All relevant dependent or associated territories (the Channel Islands, Isle of Man and Caribbean territories) must either apply automatic exchange of information or adopt the transition withholding tax arrangements applicable to Austria, Belgium, Luxembourg, and Switzerland.'

However, the Guernsey Press revealed on Tuesday that representatives from both Guernsey's retail and private banking sectors believe that the customer should be offered the withholding tax, with the option to sign up for information exchange instead.

'I think the overall view is that if we can give clients a choice, it could be better for the Island,' Peter Marchant, chairman of the Committee of Guernsey Retail Banks told the newspaper this week. This sentiment was echoed by the chairman of the Association of Guernsey Banks, Peter Rose, who suggested that:

'The whole thing is that it's dangerous to be different from one main competitor and it is important to give clients the choice.'

A comprehensive report on the OECD, FATF and other 'offshore' initiatives, including the EU's Savings Tax Directive, is available in the Tax News Reports Shop at http://www.tax-news.com/reportshop

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