Territorial tax plans scrapped again

Finance businesses pay 10% tax on profits, while other companies pay no corporate income tax

An attempt to scrap Guernsey’s current corporate tax regime has been rejected by deputies.

Currently finance businesses pay 10% tax on their profits, while other companies pay no corporate income tax.

Deputy Charles Parkinson, former Treasury Minister wanted all companies based in Guernsey to pay between 10%-15% corporate income tax.

His plans were defeated by 29 votes to 11.

Mr Parkinson said most countries are already moving towards a territorial income tax for companies, like he proposed.

Earlier this year Mr Parkinson attempted to get backing for similar plans and failed.

Deputy Nick Moakes, Economic Development member, warned the proposed change would lead to Guernsey becoming uncompetitive when it comes to attracting new businesses to the island.

The Policy and Resources (P&R) Committee has published plans to raise around £15m from businesses through changes to corporate tax.

Deputy Mark Helyar, Treasury lead, said Mr Parkinson’s proposed changes threatened to damage the island’s finance industry.

He labelled the move “incredibly irresponsible” and said the future for local businesses would have been “pretty bleak” under Mr Parkinson’s proposals.

A proposal to split up P&R’s plans from Deputy Peter Roffey succeeded earlier on Wednesday.

It means deputies can now back plans to introduce a GST, without supporting extra borrowing, or vice versa.