The repeal of deemed distribution provisions in Guernsey's zero-10 corporate tax regime has been assessed by the EU Code of Conduct Group on Business Taxation as removing ‘harmful effects' first noted by the Group in April this year.
The repeal of deemed distribution provisions in Guernsey’s zero-10 corporate tax regime has been assessed by the EU Code of Conduct Group on Business Taxation as removing ‘harmful effects’ first noted by the Group in April this year.
Guernsey’s Policy Council said that the zero-10 regime without deemed distributions therefore can now be considered compliant with the Code of Conduct. The compliance is subject to the usual formal ratification by the EU’s Economic and Financial Affairs Council (ECOFIN) at the end of this year.
Guernsey chief minister deputy Peter Harwood (pictured), said: “Obviously this is subject to the standard ratification process but I am pleased that the EU Code Group confirmed yesterday that the repeal of our deemed distribution regime does indeed, as we expected, ensure our corporate tax regime conforms to the EU Code of Conduct.”
Under the regime, all companies are taxed at 0%, except for the profits of specified financial services businesses which are taxed at 10% – and local utilities at 20%. There is a specific tax exempt regime for collective investment schemes.
Fiona Le Poidevin, chief executive of Guernsey Finance – the international promotional agency for the island’s finance industry, said: “The deemed distribution provisions primarily affect locally resident shareholders and therefore it is very much a case of business as usual for the international client base of our finance industry.”
“However, it is pleasing to hear that the Code Group has assessed our amended regime as Code Compliant. This shows Guernsey is a jurisdiction which is willing and able to move quickly to ensure it continues to meet international tax standards, while also retaining its position as an extremely competitive place to do business.”