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Guernsey Looks Set To Retain Zero-Ten Corporate Regime

by Ulrika Lomas, Tax-News.com, Brussels

29 December 2011


The European Union's Economic and Financial Affairs Council's (ECOFIN's) endorsement of the comparable tax regimes of the Isle of Man and Jersey is providing greater certainty over Guernsey's future tax regime, after months of uncertainty in which consultations took place on a potential replacement to the island's regime were zero-ten to be deemed to be a format that contravenes changing international standards.

ECOFIN on December 19, 2011 said that proposed amendments to the other two Crown Dependencies' tax regimes, that would remove Jersey's deemed distribution regime and the Isle of Man's Attribution Regime for Individuals, would bring their zero-ten tax regimes into line, following a lengthy review undertaken by the EU Code of Conduct Group on Business Taxation.

Guernsey, which was permitted to undertake its own review on the basis that it would implement changes based on the findings of the Code Group, has been notified that it will now be subject to an EU assessment, a decision welcomed by the government as it will provide cast-iron certainty over the standing of the territory's regime.

Prior to the approval by ECOFIN of its fellow Crown Dependencies' regimes, Guernsey's Chief Minister, Lyndon Trott told Guernsey's parliament, the States of Deliberation, that: “Guernsey will not undermine its economy through any revisions to its regime, nor by the timing of those revisions [until the conclusion of the assessment]."

"To that end I make it very clear again that front and centre of the review is ensuring that Guernsey’s corporate tax regime preserves our international competitiveness. Thus it is very important to be clear once again that the zero product for the clients of Guernsey’s business is paramount and will be retained irrespective of the outcome of the review,” he said.

Guernsey will now have to wait until the New Year, for a decision, although on the basis of the findings of the reviews of the Isle of Man and Jersey's regimes, Guernsey can now expect to receive the same endorsement of its own regime and will therefore shelve earlier mooted plans for a replacement regime, one wich would have had a headline 10% rate but with numerous sector-specific exemptions.

TAGS: Isle of Man | tax | investment | business | Gibraltar | international financial centres (IFC) | corporation tax | Guernsey | Jersey | offshore | standards

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