The Guernsey Government's publication of a consultation
document on its future corporate tax regime has been welcomed by
the promotional agency for the Island's finance industry.
Peter Niven, Chief Executive of Guernsey Finance, believes that
it is a major step towards indentifying a corporate tax regime
which is both internationally compliant and remains
"Publication of the consultation document is positive news
for the Island's finance industry," said Mr Niven.
"It is important that we adopt a corporate tax package
which maintains and indeed enhances the business flows into the
Island and I am confident that this demonstrates we are making
significant progress towards establishing a regime that is both
internationally compliant and competitive."
The consultation document reinforces the fact that Guernsey is
seeking a revised regime which meets five key criteria. These are
that any revised regime must: be competitive; be internationally
acceptable; sustain Guernsey's economy; be simple and
straightforward; and give rise to reciprocal benefits.
Mr Niven added: "The consultation document clearly
recognises the fundamental importance of tax neutrality to the
financial services industry. This is extremely significant and
reinforces earlier statements from the government that our funds
sector will continue to be granted exempt status. It is clear that
the needs of the different parts of the finance industry are being
taken into account and therefore, however the general rate is
applied, Guernsey will ensure that it retains its internationally
competitive position in financial services."
Guernsey's current 'zero-10' regime was introduced
from 1 January 2008 after the European Union Code of Conduct Group
ruled in the late 1990s that certain practices within the previous
regime were non-compliant with the Code. The Isle of Man and Jersey
introduced similar zero-10 regimes.
Last year, the UK Treasury informed the three Crown Dependencies
that a change in attitude arising out of the unprecedented world
economic circumstances meant that certain EU Member States were now
unlikely to accept such fiscal regimes as being compliant with the
'spirit' of the Code. Against this backdrop, in October
2009, Guernsey announced that it would review its zero-10 corporate
Mr Niven said: "Clearly the finance industry
internationally thrives on confidence and certainty and in that
respect the industry here on the Island is no different. News that
the EU Code of Conduct Group was unhappy with our zero-10 regime
was disappointing and so it was vital that we made sure our
industry clients understood the issues, that they could be
confident we were engaged with both the UK Government and the EU in
Brussels and most importantly, that we would be working hard to
maintain the Island's competitive edge as a leading
international finance centre."
Last month it was publicly confirmed that the zero-10 regimes of
the Isle of Man and Jersey will be reviewed by the EU Code of
Conduct Group from September 2010. However, the EU Code of Conduct
Group has no plans to review Guernsey's regime.
Mr Niven added: "I was pleased with the recent news that
Guernsey's corporate tax regime is not to be reviewed by the EU
Code of Conduct Group in September and I am particularly pleased to
see Guernsey engaging positively with the Code Group. Indeed, the
Chief Minister said last week that Guernsey 'now has a
good understanding of the position and processes of the Code
Group.' Guernsey's destiny remains in its own
hands and with strong leadership and a highly professional team
leading the tax review I am confident that Guernsey will maintain
its undoubted edge and pre-eminence in international financial
The findings of the EU Code of Conduct Group review into the
zero-10 tax regimes of both the Isle of Man and Jersey will be
taken into account along with the responses to the consultation
which closes on Friday 27th August. It is expected that
a formal statement on the direction of the future corporate tax
strategy will be made during the Budget in December.
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