Building on his recent interview with Hayley Dixon of The Sunday Telegraph where he said a lack of 'balance and objectivity' in the coverage of the so-called 'Paradise Papers' hack had distracted attention away from the real debate of how to ensure tax transparency, Guernsey Finance Chief Executive Dominic Wheatley shares his thoughts on Guernsey's current approach.
There is emerging consensus and a developing partnership approach to combating harmful tax practices. This is clarifying the boundaries of acceptable practice and the roles of the various parties.
Our role as an international finance centre is fourfold:
Firstly, not to tax the revenues generated from economic activity elsewhere or the income of those tax resident in other jurisdictions. This principle of tax neutrality is important in ensuring that tax revenues are available to the tax authorities to whom they are due without leakage.
Secondly, to tax the economic activity undertaken in Guernsey. Under Guernsey's tax law, those that provide services to international finance structures are subject to corporation tax. This means that there is no special tax treatment in attracting business offshore.
Thirdly, to ensure that data is made available to competent authorities, including foreign tax authorities, which enables them to apply their tax rules on those tax payers subject to them. Guernsey has consistently been in the first wave of adopters of international initiatives on tax transparency, including the Common Reporting Standard (CRS) that are now the global standard. Indeed, we were exchanging tax information with more than 50 jurisdictions, including the UK, before the commencement of CRS.
Fourthly, where abuse is suspected, to cooperate with competent authorities such as law enforcement agencies to aid in investigations. This has been an area where Guernsey has been a leader, rather than a follower. The world's first regulatory regime for trust and company administrators, which commenced in Guernsey in 2001, includes the specific requirement that all ultimate beneficial owners be known and verified. This enables not only proper due diligence to be applied, but that information is available when requested. Therefore, the establishment of a centralised register of beneficial ownership in Guernsey during 2017 was a consolidation of a system already in place by which information could be shared with foreign tax authorities and law enforcement agencies.
The final obligation to ensure the proper taxation of individuals and companies rests with the tax authorities to whom they are subject – namely to collect the tax to which they are entitled.
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.
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