As published on guernseypress.com, Thursday 10 June, 2021.
The scope of proposed changes to the global tax system could be limited for Guernsey.
Policy & Resources treasury lead Mark Helyar said Guernsey did not have global tech companies, which were the target of the G7-backed proposals.
‘Guernsey is very focused on investment activity rather than on encouraging large companies to shelter profits. That’s not been our business model,’ he said.
A small number of local subsidiaries of global firms may fall within the remit, he said, but that was unclear. And it was internationally recognised that the funds category, crucial to Guernsey, was considered exempt. While a global minimum 15% corporate tax rate was supported by the G7, it had not actually been agreed, Deputy Helyar added.
‘Until we see what that looks like, I can’t really comment any further other than to say we will be fully engaged and we intend to be fully compliant if a global standard emerges from these discussions,’ he said.
‘In some ways, it’s a good thing. It’s a level playing field and that’s really what we’ve always wanted.’
While a higher corporate tax rate could potentially produce extra revenue, Deputy Helyar said it would not be a significant amount, and not ‘anywhere near’ what was needed to meet revenue targets. It would also take years for global reforms to be agreed and implemented, he added, and could lead to a more complicated tax book, with carve outs and devil in the detail.
‘We have no plans to change zero-10, or the corporate tax regime at the moment. If a global accord and a level playing field can be created, then we have the choice of whether to comply with it or whether not to. And we’d have to take into account the economic impact of doing that one way or the other.’
In addition, there was an ‘exceptionally limited’ number of firms left in Guernsey’s zero tax bracket, he said, with zero’s role really critical in providing for tax neutrality.
Losses originally made as a result of the zero-10 regime had also since been backfilled with other taxes, said Deputy Helyar. A lot of financial services businesses that were initially exempt were now paying corporation tax.