P&R to proceed with corporate tax discussions

Thursday 23 February 2023

Avenues to raise an additional £10-20m per year from corporations will still be investigated despite not being formally agreed by the States last week, the Policy & Resources Committee has said.

But more information will not be revealed until after the senior committee has met next week.

P&R’s defeated tax package included a proposal to consult with the other Crown Dependencies to see if a tandem approach could be adopted to raise additional revenues from corporates without harming competitiveness or compliance with international obligations.

It said that proposals to increase company contributions should be brought back to the Assembly no later than November. 

That consultation ultimately featured in all five tax and spend packages which were put to deputies last Friday, but each failed to gain enough parliamentary support.

Instead, a long list of reviews was ordered but this did not include any resolution on the corporate tax system or discussions with Jersey and the Isle of Man.

Following questions from Express, the Committee said it is now mulling the “outcome of the debate and the best way forward".  

“That of course includes consideration of the broad support for continuing with investigations into how best additional revenue can be raised from the corporate sector, and that this should be done in consultation with the industry and other Crown Dependencies to ensure Guernsey maintains its competitiveness.”

Pictured: Corporate taxation featured heavily in the debate and protest around the tax review.

Taxes on corporate income make up 10% - approximately £50m - of Guernsey’s annual tax take, even considering the 0% headline rate applied to some enterprises under the zero-10 regime.

Among the options presented in the tax policy letter was a 15% tax rate for those currently falling in the 0% tax band, and a fixed annual fee from companies that benefit from local laws and regulations.

Those could be achieved through what the Committee call an “alternative corporate vehicle”.

Treasury forecasts that an additional £10-20m per year could be raised through these measures, and the proposed changes to the global minimum rate of corporate tax, but it insists they alone are not sufficient to plug a projected £85m black hole in future years

“The outcome of the last week’s debate leaves the island without a clear direction, but the changes in the make-up of our population are still there, meaning pressure on essential services including health care and pensions continues to rise and there is still an urgent need to address the growing deficit,” P&R said. 

The Committee will comment further after it next meets on Tuesday.

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