Guernsey Chief Minister Lyndon Trott has welcomed the outcome of the EU Code of
Conduct Group's review of the business tax regimes in Jersey and the Isle of Man,
noting that this should provide greater certainty for businesses over the future
of Guernsey's 'zero-ten' tax regime.
In October 2009 the three Crown Dependencies (Guernsey, Jersey and the Isle
of Man) were informed by the UK Treasury that the EU Code of Conduct Group on
Business Taxation no longer deemed their 'zero-ten' corporate tax regimes to
be compliant with the ‘spirit’ of the Code, with many EU member
states considering their level of tax competition to be ‘predatory.’
In June 2010, the Code Group announced that it would be conducting a review
to examine the business tax regimes in Jersey and the Isle of Man after identifying
'harmful' elements. Guernsey was permitted to conduct its own review on the
understanding that it too would adapt its regime if necessary upon conclusion
of the review.
The latest announcement from the Code Group on September 13 affirms that proposed
amendments to Jersey's and the IOM's tax regimes which entail the abolition of deemed distribution provisions would bring the two territories' regimes into line with European standards.
The decision, which must first be adopted by European Finance Ministers, means that the 'zero-ten' tax regimes in place in the three territories would continue
to be internationally accepted.
Prior to the latest announcement, Guernsey had been considering a territorial
tax regime with a headline rate of 10%, with various exemptions.
However, according to the island's Chief Minister, these proposals will likely
be abandoned should the Code Group's findings be adopted by ECOFIN.
A statement from Trott said:
"We will continue to monitor closely the review process up to the ECOFIN
meeting in December, and we will also continue to monitor the Code Group's ongoing
assessment of Gibraltar's territorial system.”
"As consistently stated, when all of the relevant Code Group processes
are concluded we will set out our next steps, informed by our ongoing dialogue
with business and regulatory stakeholders, and in line with the clear principles
stated throughout our own review process.”
"While I am not in a position to pre-empt the outcome of our own review
process at this stage, I can say that the stated outcome of Jersey's Code Group
review does significantly reduce the likelihood that substantial changes to
Guernsey's corporate tax regime will be required.”
"I have consistently said that the most likely outcome is that Guernsey
and Jersey end up with very similar corporate tax regimes. Only last week I
shared a platform in both Guernsey and Jersey with Jersey's Chief Minister Terry
Le Sueur, and we both agreed that that is very much still the case."
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