Guernsey is reviewing its corporate tax regime in line with its agreed fiscal and economic strategy.
The island’s current “zero-10” corporate tax regime was introduced on 1 January 2008. In subsequent discussions, officials from the UK Treasury confirmed that it was compliant with international standards and the EU Code of Conduct.
Jersey and the Isle of Man followed a broadly similar approach.
However, all three Crown Dependencies recognise that the recent and unprecedented changes in the world economy have led to shifts in perceptions and attitudes across the globe.
At meetings held on Tuesday between the Crown Dependencies and Rt. Hon. Stephen Timms MP, Financial Secretary to the Treasury, it became apparent that these changes in attitudes mean that other EU member states are now unlikely to accept the stance of the UK that its fiscal regimes are code compliant.
Guernsey’s Chief Minister Lyndon Trott says: “Our ‘zero-10’ strategy was always intended to be a multi-stage process, in order to ensure that our tax revenues are sufficiently sustainable in the light of changing economic uncertainties.
“As a result of the changes in international attitudes, the terms of consultation on this issue will be broader than had previously been envisaged, and will aim, working with the UK and other EU member states, to ensure that our fiscal regime remains competitive and within international standards.”
It has been agreed that all the Crown Dependencies will address these issues, working together and sharing resources. In particular, due to their geographic and political similarities Guernsey and Jersey will be working closely together on the political aspects of the consultation.
The review in Guernsey will be carried out through a Fiscal and Economic Policy Group, chaired by the Chief Minister. Technical work will be led by the Treasury and Resources Department.
Guernsey’s Treasury and Resources Minister Charles Parkinson says: “Guernsey has been committed to reviewing its fiscal strategy after the first phase of ‘zero-10’. I am pleased that we will now be undertaking this review alongside our colleagues from Jersey, with the intention that there should be no significant differences between the corporate tax regimes of the two islands.”
Peter Niven, chief executive of Guernsey Finance, the promotional agency for the island’s finance industry, adds: “The Guernsey government is reviewing this strategy in conjunction with the other Crown Dependencies with a view to delivering corporate tax regimes broadly similar to each other that remain competitive, yet also within international standards.
“We are acutely aware that businesses and their clients require certainty and are reassured that the government have indicated that they intend to move as speedily as possible to agree a corporate tax regime that is sustainable for the future. Early indications from our financial services and business community appear to support the approach outlined by the government and we look forward to seeing progress in the coming weeks and months.”