European Union restarts Guernsey corporate tax review

Deputy Trott said any change had to keep the regime competitive

The review into Guernsey's corporate tax regime will restart, the European Union Code of Conduct Group has announced.

Concerns were raised by the UK Treasury in 2009 over the island's zero-10 tax not being compliant with the EU code.

The review has been on hold since May 2010 after the States gave assurances it would revise the strategy.

Chief Minister Lyndon Trott said: "We will be engaging fully with the code group during the review."

He said: "The process of review itself is one that we support in principle.

"The review will also provide us with a welcome degree of technical clarity on certain unique aspects of Guernsey's tax regime.

"Our own review process will continue alongside the code group review process, independent of it but complementary to it.

"The integrity of both processes is central to us taking a fully informed decision about any revisions to our existing corporate tax regime."

Zero-10, introduced in January 2008, meant the standard rate of income tax for companies was set at 0%, with some specific banking activities taxed at 10%.

The similar regimes of Jersey and the Isle of Man have undergone reviews, which in September found they would be compliant with the EU code if deemed distribution (in Jersey) and attribution regime for individuals (in the Isle of Man) were removed.

Both mean residents who are shareholders of island companies pay personal income tax on any unallocated company profits.

The decision by the code of conduct panel is due to be ratified by EU Finance Ministers at the ECOFIN meeting on 30 November 2011.

Deputy Trott said he was surprised the Guernsey review had resumed before this meeting.

He said: "The corporate tax regime in Guernsey was closer to what we believed all long, the code group would liked to have seen from the onset.

"It'll be a case of them having to look carefully at the details and make a judgement.

"Any new regime must be competitive, maintaining tax neutrality is essential and it must promote a sustainable economy and that is a message the international community understands."