EU review 'will help the States', says tax expert
- 31 October 2011
- From the section Guernsey
A review of Guernsey's corporate tax regime will give the States clarity on whether or not its zero-10 system is harmful, a financial expert has said.
The European Union code group announced it was restarting the review at the weekend, having suspended it in 2010.
Graham Parrott said the EU's re-examination of the island's zero-10 tax was inevitable.
He said it would help the States decide what regime would have EU support.
Zero-10, introduced by the States of Guernsey in 2008, meant the standard rate of income tax for companies was set at 0%, with some specific banking activities taxed at 10%.
Reviews have already been carried out for similar regimes in Jersey and the Isle of Man.
Both island governments were told if certain changes were made, the tax systems would be compliant.
Mr Parrott said: "The review of the zero-10 we have said it was harmful so we have to make certain changes to fit in with what Jersey and the Isle of Man does in order to make them acceptable.
"I think zero-10 is the right thing, unfortunately as an island we don't seem to like it much and the reality is we're going to make zero-10 perhaps more unpalatable in order to make it acceptable to the European Union."
He said: "My personal view is if Jersey keep zero-10 we should go along with it.
"Businesses would be fine but you and I are going to have towards keeping that regime, but in truth we should have started doing that a few years ago."