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More Guernsey businesses 'may be taxed' under zero-10

01 November 11 11:40
Deputy Charles Parkinson

More businesses may have to pay tax if Guernsey retains a zero-10 tax regime, according to the island's treasury and resources minister.

A European Union review of the island's corporate tax system has restarted after reviews of Jersey and the Isle of Man were completed.

Deputy Charles Parkinson said changes to the current system could "marginally" increase the deficit.

He said charging more companies a 10% tax could negate the rise.

In Guernsey zero-10 means the standard rate of income tax for companies is set at 0%, with some specific banking activities taxed at 10%.

Mr Parkinson said: "They've reviewed Jersey and the Isle of Man and we have a clear ruling on zero-10 with any deemed distribution or attribution rules.

"We don't yet have clarity on territorial-10 in the Gibraltar format, which it would have been nice for us to have."

'Far-reaching reform'

Gibraltar introduced a new corporation tax at the start of 2011 which applies a flat rate of 10% for all companies and a 20% rate for utility companies and companies with a dominant market position.

However, this tax applies solely to income accrued or derived from the territory so some companies would pay no corporate tax.

The EU has yet to rule on the system, but Gibraltar has been in discussions about its corporate tax since 2003.

Mr Parkinson said: "The [review] process is underway or complete in the case of the other offshore jurisdictions and [the EU] just wants Guernsey to be brought into the net.

"We did think more far-reaching reform would be necessary, we now know the amendments they proposed are satisfactory to the code group."

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