Guernsey zero-10 tax changes get European Union formal approval
Changes to Guernsey's corporate tax regime, to make it comply with European rules have been formally approved by the European Union (EU).
The EU's council of finance ministers ratified the Zero-10 system following the removal of deemed distribution.
Under the island's tax system most corporations pay no tax, while others pay 10% and a small number pay 20%.
Chief Minister Peter Harwood said the formal endorsement gave the island's companies certainty for the future.
Guernsey Zero-10 Timeline
- May 2007 - States agree to introduce a Zero-10 tax
- Jan 2008 - Zero-10 corporate tax was introduced in Guernsey
- Oct 2009 - UK Treasury raises concerns and Guernsey agrees to a review
- May 2010 - EU suspends review of Guernsey's strategy
- Oct 2011 - EU restarts review into Guernsey's tax regime
- April 2012 - EU rules Guernsey's tax regime is harmful
- June 2012 - States approve removal of deemed distribution
- September 2012 - Zero-10 system, with deemed distribution removed, approved by European Union's Code of Conduct Group on Business Tax
Previously the system had been deemed "harmful" by the EU's Code of Conduct Group.
The area that was removed, deemed distribution of business profits, meant island residents who were shareholders of island companies would pay personal income tax on any unallocated company profits, while anyone living off-island would not.
Similar changes to the Isle of Man and Jersey tax systems, which had also been described as "harmful" were formally approved by the European Union at the end of last year.
Deputy Harwood said hard work had led to the island's tax system complying with the code and it being recognised as meeting the standards of good governance in tax matters.
He said this was despite "the misinformation and misperceptions that continue to be perpetuated in some quarters about our jurisdiction".