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Guernsey, it has been concluded, is not harmful to the rest of the world in regards to the way its tax regime is structured.
This comes following a review from the Organisation for Economic Co-operation and Development, who have been looking into taxation recently. They inspected 12 jurisdictions that have low or no corporate tax rates, including Guernsey, Jersey and the Isle of Man.
The review concluded that Guernsey’s taxation regime was not harmful when reviewed against the OECD’s standards, aligning with a similar decision by the European Council of Finance Ministers (ECOFIN) in March 2019.
"In March, we welcomed the ECOFIN decision that Guernsey meets the EU regional standard in respect of taxation following the implementation of a legal substance requirement from the 2019 tax year," Deputy Gavin St Pier, the President of Policy & Resources, said.
"That implementation work has also ensured that we meet the OECD’s global standard on fair taxation. The affirmation that our taxregime is not harmful in the global economy is an important decision to help challenge misconceptions about Guernsey."
Deputy Gavin St Pier and Scottish First Minister, Nicola Sturgeon.
This review tested jurisdictions against the OECD’s own standards relating to economic substance, which were published by the FHTP in 2018. The FHTP’s findings published on 23 July 2019 acknowledge that the economic substance regime adopted by Guernsey in 2018 and implemented from the start of this year creates a sufficient legislative framework to ensure it is not considered to be a harmful regime.
The FHTP’s findings follow a decision in March 2019 by the EU that Guernsey is a cooperative jurisdiction in respect of tax matters when reviewed against the EU’s standards of transparency and fair taxation. In 2017 the EU’s Code of Conduct Group for Business Taxation decided to review the cooperation status of third countries to the EU on tax matters. During 2018, Guernsey worked with the EU (alongside Jersey and the Isle of Man) to design and implement a legal substance requirement within its taxation regime with effect from 01 January 2019.
The legislative changes were reviewed by the EU in early 2019. The European Council (ECOFIN) decided that Guernsey was a cooperative regime on 12 March 2019.
Deputy St Pier added: "Guernsey has a long track record as a transparent and cooperative jurisdiction that meets international standards as they emerge. The maintenance of this track record remains one of the priorities in the island’s Future Guernsey Plan. The OECD’s review published this week provides further independent confirmation of this. It will be no surprise to anyone who has knowledge of Guernsey’s exemplary standards in this field."
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