Guernsey Promoted At Second Annual City Briefing

by Jason Gorringe, Tax-News.com, London

30 June 2003

That Guernsey's finance sector is in partnership, not competition, with the UK was the message given by former Economic Secretary to the Treasury Angela Knight at the second annual briefing to representatives of the City of London, organised by John Bridle of the Guernsey Promotional Agency last week.

Mrs Knight, who now fulfils the role of chief executive of the Association of Private Client Investment Managers and Stockbrokers told the audience that Guernsey has "a considerable internationality which is important for firms quartered here and collectively the two centres are stronger than the sum of their two parts."

Ms Knight revealed that she respected Guernsey's decision to opt for the witholding tax in relation to the European Savings Directive, calling it a "brave and appropriate" move.

"Whilst the British Government have considered that the most appropriate way forward for implementing that Directive is for information exchange, and this is correct when it comes to the bond market, it is not particularly helpful for the wealth management business. Therefore, Guernsey's decision to apply a withholding tax, a route which has also been taken by Switzerland and Luxembourg, we consider to be not just a brave one but an appropriate one as well," Knight observed.

She continued:

"It gives firms quartered in London with a strong international wealth management business an option of choosing an in-Europe but not EU centre as a partner where withholding tax can be applied rather than information exchanged, if that is what is required."

On the subject of regulation, Mrs Knight noted that as the regulatory environment grew stricter in the UK, "a partner where regulation is sensible, especially in those areas where the shoe may pinch too tight, is necessary."

Peter Neville, Director General of the Guernsey Financial Services Commission, was anther who attributed the jurisdiction's success as a major financial centre to its respected regulatory regime.

"The two are closely linked - Guernsey's reputation depends upon having a regulatory regime that continues to meet international standards. Without our reputation as a well-respected and well-regulated jurisdiction we could not expect our business to grow or the international community to distinguish us from financial centres - onshore and offshore - that do not meet the same standards as we do," Mr Neville observed.

Deputy Laurie Morgan, President of the States of Guernsey Advisory and Finance Committee, meanwhile, addressed the results of a recent survey of the finance industry which showed a high level of confidence existed in the jurisdiction. He also referred to the island's tax strategy for the future, which is intended to reduce corporate tax to zero whilst maintaining personal tax at 20% and avoiding the introduction of VAT.

"I am convinced that this quite radical strategy will help our industry to remain attractive in an increasingly competitive international market place," Deputy Morgan assured those attending the briefing, adding that the EU's statement confirming that the proposals are not harmful under the new Business Tax Code of Conduct rules represented "a very significant international endorsement of Guernsey's intended taxation standards".

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