Guernsey goes for a zero rate of corporate tax
Guernsey parliament has passed a set of economic and taxation changes that includes a zero rate of corporate tax and capping personal tax at GBP 250,000.
The States of Guernsey has agreed to a package of measures which includes:
- A zero rate of income tax on company profits, except for specific banking activities, which will be taxed at 10%
- Guernsey residents continue to pay tax at 20% on assessable income
- Personal tax capped at GBP 250,000 on non-Guernsey income and investment income
- Taxation of Guernsey-resident shareholders on distributed company profits only
- Wealth taxes such as inheritance tax and capital gains tax will NOT be introduced
'I am delighted that this package has been agreed by the States - it really is very good news for what is an already buoyant finance industry,' said Peter Niven, the Chief Executive of GuernseyFinance, the island's promotional agency for the finance industry.
'Firstly, this decision provides the industry and its clients with certainty going forward and secondly, the set of measures agreed will further enhance the environment for doing business in the island.
'Importantly this package has the support of not just the finance industry but also the much wider business community. The measures reinforce the message that Guernsey is very much open for business and welcomes high net worth individuals. They also clearly promote enterprise within the economy as a whole, in particular high-earning, low footprint activities and the feeling within the finance industry is that they will help attract new business to the island, especially activities such as hedge fund management.'
The States of Guernsey approved the set of measures at its June sitting and the main strands will come into effect from 1 January 2008.
The move has been made against the background of the European Union developing a Code of Conduct on Business Taxation. The EU's code deems a tax regime harmful if preferential rates are made available to non-residents but not to a jurisdiction's own residents.
Although Guernsey is not within the EU's fiscal territory and is not within the EU single market for financial services, the countries of the EU (including the United Kingdom) are its major economic trading partners.
'Guernsey has consistently demonstrated that it is willing to participate in constructive dialogue with the EU and this has been no exception,' said Mr Niven.
'Indeed, the result is unquestionably positive in that Guernsey will ultimately have an even more competitive environment for attracting business to the island.'
Of the 30,000 individuals employed in Guernsey, more than 7,000 (23%) are employed in the finance sector itself, which directly contributes 35% of the island's GDP and 65% of the export economy.
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