Guernsey Launches Consultation On Future Tax Strategy

by Jason Gorringe, Tax-News.com, London

23 March 2005

The Guernsey government on Tuesday launched a consultation on establishing a strategy for safeguarding the future economic wellbeing of the Island, in view of the major changes to company tax law recommended by a recent States report.

The Fiscal & Economic Policy Steering Group asked Guernsey-based individuals, business representatives and associations to comment on any aspect of the subjects raised by the Consultation Document. However, the Group revealed that it was particularly seeking answers to the questions:

• How should the Island respond to the challenges ahead so that its social, political and economic future is maintained and, wherever possible enhanced?
• How can the Island take advantage of the challenges facing it to enhance its competitive position?
• How can Guernsey’s taxation system evolve to ensure that the Island is a better place to do business and attract more good quality business which is “Guernsey Friendly”?
• Do you agree with the Group’s conclusions on the broad taxation strategy for Guernsey businesses, both in the finance and non-finance sectors?
• Do you agree with the Group’s conclusions concerning the treatment of regulated finance industries, including captive insurance companies?
• Is it important to you that, in general, businesses trading in Guernsey should be locally owned and pay tax locally?
• Should regulated trading entities (including States Trading entities) be subject to the same, or similar, rates of taxation as regulated Finance Sector businesses?
• Is there a case for taxing significant taxpayers, businesses and individuals, at a lower rate after a certain amount of taxation has been paid by them at the standard rate?
• What measures should be taken by the States (on expenditure and income) to compensate for the anticipated fall in tax revenues?
• Is there merit in revising the present Social Security Contribution system to reduce the burden on general revenue?
• What are your views on the introduction of a General Sales Tax or are there better alternatives?

In the report upon which the consultation was based, a new "zero-ten" system for corporate taxation was proposed for introduction in the next few years; a similar system to those put forward by the authorities in Jersey and the Isle of Man.

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