Deloitte hosts annual tax debate

Wednesday 24 July 2019

Deloitte’s Head of Tax Policy Daniel Lyons has been in Guernsey for the firm's annual international tax debate.

The event speakers tackled a number of topical issues including the ongoing evolution of international tax and transparency rules, and how Guernsey is seeking to respond.

Mr Lyson spoke alongside Deloitte Guernsey's Tax Partner Jo Huxtable, States Director of International and Constitutional Affairs Jo Reeve and Deputy Lyndon Trott.

Ms Huxtable opened the event by stating that international relations and communication between governments has never been more important. She noted that Guernsey's long-standing constitutional relationship with the UK is changing and said close collaboration with the EU has been essential in view of the work needed to address EU Code of Conduct Group's requirements on economic substance.

Mr Lyons went on to describe the dynamic changes in global tax policy over the past few years, driven by the financial crisis, and questions being raised about whether large multinationals and high-net-worth individuals are paying their "fair share". The economic impact of an ageing population and a smaller workforce were also raised.

It was also noted that proposals to introduce Qualified Majority Voting in relation to tax aimed to achieve a more efficient decision-making process, and could see more power in the hands of the larger EU member states with the views of smaller states having a smaller influence.

The OECD is overseeing the global project to harmonise tax rules across the world. This was described by Daniel as a two-phase process, with BEPS being the first phase which has been about enlarging the tax base. The second phase - the Programme of Work on the Tax Challenges Arising from the Digitisation of the Economy - looks at how tax should be distributed between governments depending on the activities of taxpayers, and includes proposals focused on countries which have a low effective rate of tax.

The OECD’s latest proposals reference carve-outs which could be available to certain jurisdictions and industries and, according to Ms Reeve, are something that Guernsey’s government is aware of and will monitor.

Deputy Lyndon Trott provided an update on the status of Guernsey’s position on beneficial ownership. He said Guernsey would move to a public register of beneficial ownership at such time as that becomes an international norm. He announced the island is publishing a detailed action plan to demonstrate how it will respond to global developments in regard to beneficial ownership over the next couple of years.

The debate ended with a reflection on how the green agenda is becoming more important in raising tax revenues but ultimately in changing behaviours. Deputy Trott outlined the significance of the green agenda in Guernsey, which has driven the establishment of the Green Fund in 2018 - the world’s first regulated green investment fund product, and the aspiration of the island to be at the forefront of the development of green and sustainable finance.

Pictured top: Daniel Lyons.