Guernsey Finance Industry Welcomes A&F Decision Over Retention Tax

by Jason Gorringe, Tax-News.com, London

08 April 2003

The decision, made at a meeting of the Advisory and Finance Committee last Friday, to adopt a retention tax in response to the EU's Savings Tax Directive has been supported by the majority of the Island's finance industry, according to a Guernsey Press and Star report.

Peter Symes, chairman of the Association of Guernsey Banks welcomed the move, explaining that: "We had to maintain our competitive nature and we have to be seen to be doing the right thing."

Another prominent figure from the banking world, former chairman of the Association, Peter Rose echoed Symes's sentiments regarding the need for the Island to maintain its competitiveness, and indicated that the finance industry as whole was very supportive of the decision.

Even the captive insurance sector, which had initially favoured the exchange of information option, welcomed the A&F's announcement, according to the Guernsey Press. Clive James, chairman of the Guernsey Insurance Company Management Association told the newspaper that he was pleased that the Island had "adopted a flexible approach" and was willing to accept the A&F's decision.

The only sector which appeared lukewarm with regard to the move was the retail banks and building societies. Their spokesman, Peter Marchant (chairman of the Committee of Guernsey Retail Banks) said his organisation needed time to consider the consequences of the retention tax, and explained that it was too early to issue an official response.

Meanwhile, the German ambassador to the UK, Thomas Matussek, heaped praise on the Island for its tough stance regarding financial regulation and money laundering during his recent visit. It is thought to be the first visit by a German ambassador to the Island, and Matussek said it had been high on his list of priorities when he took office in June 2002.

"In the last couple of years these two islands have become very important for Germany because many of our financial institutions and banks are doing business with Guernsey and Jersey and, for the right or wrong reasons, the Channel Islands have got into the press. It’s very reassuring for me to see that the misconceptions of the situation have been cleared," the Guernsey Press quoted Matussek as observing during his visit.

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