Guernsey proposes new 10% tax rate for fiduciary businesses

There has been speculation for some time about whether Guernsey would extend its 10% tax rate to fiduciary businesses, to bring it in line with current practice in neighbouring Jersey and to help fill the fiscal hole brought about by the abolition of the deemed distribution provisions under pressure from the EU earlier this year.

Today has seen confirmation that this will be debated by the States on 12 December 2012 as part of the budget proposals.

Up until now, under the Island’s zero ten tax regime, fiduciary businesses have been zero rated for tax.  The aim of the new budget proposals is to raise an additional £12 million from the financial sector.

As yet details are sketchy, and it is not entirely clear exactly who will be caught into the new 10% tax band (for example fund administrators), but it can be assumed that traditional trust companies certainly will be.

The new tax will be applied to fiduciary businesses, but not to any underling client entities administered by them, unless they also meet the criteria for fiduciary business themselves.