Guernsey to learn its zero-10 fate on 17th April

It has been confirmed that the EU Code of Conduct Group will discuss Guernsey’s zero-10 corporate tax regime at its next meeting on 17 April.

Guernsey is the only one of the three Crown Dependency islands not yet to have received the Code Group’s approval for its zero-10 scheme, and is keen to get the issue resolved as soon as possible, because uncertainty regarding taxation is perceived by many to be a significant bar to new business. 

Guernsey was excluded from the Code Group’s initial review of zero-10 schemes in Jersey and Isle of Man because it committed to undertake a formal reassessment of its corporation tax regime, with a view towards possibly replacing it with a new system.  This plan was later abandoned, and so the Island’s corporate tax system is being considered anew by the Code of Conduct Group.

If the Group is happy with Guernsey’s existing taxation arrangements, then it is possible that the island could have its scheme approved by the end of June.  However, the review is no mere rubber stamping exercise. Jersey and the Isle of Man only got their zero-10 regimes approved after changing the rules relating to deemed distributions.  Guernsey is trying to argue that it does not need to make similar changes, because its zero-10 regime is sufficiently different that it already meets the standards.  If it does not succeed with this argument, the finance industry in the Island will be unhappy at the prospect of further delays in clarifying the Island’s corporate tax system.  The local politicians will therefore doubtless be having an anxious Easter.