A Guernsey working party that was established to assess the OECD's action plans and the EU Commission's Base Erosion and Profit Shifting (BEPS) Directive has found that the Island is already largely compatible with the BEPS agenda due to its long-standing focus on business substance.
The working party, which is chaired by Guernsey's Treasury and Resources Minister, Deputy Gavin St Pier, comprises representatives from Guernsey's Government, the Guernsey Financial Services Commission and tax professionals from the Institute of Directors and the Guernsey Society of Certified and Chartered Accountants.
Over the first part of 2016, work has focused on assessing the potential impact on the finance industry of the OECD action plans and the EU Commission's Directive, which was published in late January 2016. At this stage, the working party has formulated a number of views that will help to inform its future work:
- That Guernsey is already largely compatible with the BEPS agenda due to its long-standing focus on business substance, and is now focusing on identifying opportunities for business, whilst acknowledging that there will be some challenges. Guernsey's finance sector model and regulatory framework is not particularly conducive to Guernsey being exploited for base erosion and profit shifting and so ensures equivalent outcomes to those the OECD and EU Commission are seeking to secure.
- Guernsey can maintain stability and competitiveness as well as a commitment to any new international standards.
- That Guernsey businesses are already actively considering how to respond to the new global standards that the BEPS agenda will establish, and that the States, through further consultation with industry, will actively play its part in that through putting in place appropriate legislation and regulatory policy.
- That the BEPS agenda is one that government and businesses in Guernsey supports, and will demonstrate that support through the new Policy and Resources Committee being recommended to formally commit to country by country reporting in May 2016.
Work will continue through the next few months of 2016 with different parts of the finance and wider business sector to fully assess the detail of the OECD action plans and 'BEPS Directive' and the steps that Guernsey will need to take. It is also acknowledged that Guernsey, as a third country with a strong financial services sector, will be involved in the next 24 months in an EU/Code Group score boarding process that will assess third countries against the EU's updated good governance criteria.
Guernsey welcomes this as an opportunity to further demonstrate that it clearly meets international good governance standards in relation to transparency, to automatic exchange of information, and to fair and competitive taxation.
Deputy St Pier said: "We are hugely grateful for the time and expertise offered by Guernsey's tax professionals and business bodies in assessing the potential impact of the BEPS action plans, and in helping us to consider the steps that we might need to take in the future. Guernsey is already in a leadership position on tax transparency, and we are also well-placed on the emerging new BEPS international standards. As these standards begin to be implemented, we are confident that we will be able to meet them while providing stability, competitiveness and opportunities for our finance sector."
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.
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