European Union corporate tax review 'affects' Guernsey

A tax review of Jersey and the Isle of Man means Guernsey will be expected to introduce a new corporate tax regime, according to the Policy Council.

The ongoing Jersey and Manx review by the European Union Code of Conduct on Business Taxation found the zero-10 tax system to have harmful effects.

The system of zero corporate tax operates on all three islands.

The Policy Council said as a result, Guernsey's zero-10 regime "will need to be thoroughly reviewed and assessed".

Guernsey's zero-10 policy, which was introduced at the start of 2008, was set to be scrutinised after concerns were raised that it was not compliant with the EU's code of conduct on tax matters.

However, the EU announced in May that it would not be reviewing Guernsey's regime, something the Chief Minister Lyndon Trott put down to the island's "transparent approach" to a new strategy as an internal review was undertaken.

The Policy Council said one of the aims of Guernsey's own corporate tax review was that it must meet five key criteria, including being internationally competitive and give rise to reciprocal benefits.

It added that any new policy would not put the island at a competitive disadvantage.