Jersey And Guernsey Both Announce Plans To Reduce Corporate Tax To Zero

by Jason Gorringe, Tax-News.com, London

26 November 2002

Both Jersey and Guernsey plan to introduce a zero rate of corporation tax for companies, according to reports last week.

Jersey's announcement on Tuesday and Guernsey's on Friday follow the Isle of Man's commitment earlier this year to introduce a zero rate by 1 January 2006, although in all three cases, financial service companies will be obliged to pay a higher rate.

Speaking to the Jersey Evening Post last week, Finance President, Frank Walker denied that there was competition between the two Channel Island jurisdictions to make the announcement first, explaining that there had been close cooperation and coordination between the two governments.

According to the JEP, Senator Walker also denied that Jersey's finances will come under any great strain, and that the government will be forced to introduce another type of tax to compensate:

'We won't face any huge income losses any more than they (the Isle of Man's government) will. The intention is not to lose any income. We made that very clear when we went out for consultation on the fiscal strategy.'

Meanwhile in Guernsey, Advisory and Finance Committee chief, Deputy Laurie Morgan also stressed that there are no negative implications for individual taxpayers attached to the move:

'We envisage a package which doesn't impinge on the individual,' he explained to the Guernsey Press and Star.

He also told the newspaper that it was absolutely necessary for Guernsey to follow the lead of other jurisdictions, both in terms of increasing competitiveness, and in order to comply with the European Union's code of business conduct over taxation:

'Ireland is going to 12.5% - that doesn't make 20% look very attractive any more. 20% is still a relatively low rate but it is now higher than the emerging rates from elsewhere - and we are in competition.'

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