This Is Guernsey

By Tom Edwards

GUERNSEY should not be stigmatised by the term ‘offshore’, according to the island’s branch of the Society of Trust and Estate Practitioners.

Step Guernsey chairman Alison MacKrill (pictured) said the island was a ‘prominent finance centre of excellence’ and therefore the offshore distinction was not applicable in this way.

The International Monetary Fund has decided to drop the terms, onshore and offshore, a move that has been applauded by Chief Minister Lyndon Trott. Step director of policy Keith Johnston said the organisation would robustly make the case to the Treasury Select Committee that the arbitrary onshore/offshore divide should come to an end.

‘The term, “offshore”, is wrong because it is often used to stigmatise jurisdictions based on their geographic size or location,’ said Mr Johnston. ‘Instead, any assessment of financial centres should be unequivocally based on a uniform assessment of risks to global financial stability, money laundering and fraud.’

Other major finance-sector organisations have backed Guernsey as a financial services centre in their submissions to the UK Government’s inquiry into offshore ones.

The British Bankers’ Association and the Offshore Group of Banking Supervisors have both said that Guernsey and all the Crown Dependencies play an important role in the global industry and do not represent a threat to ‘onshore economies’.

Step said that well-run, low-tax international financial centres were essential complements to onshore economies, such as the UK’s.

‘It is no accident that the world’s leading IFCs are clustered around New York and London.’

The Step submission to the Treasury Select Committee’s investigation into offshore centres, part of its ongoing work- stream of financial stability and transparency, also stated:

‘Leading economists have shown how low-tax centres reduce the user cost of capital for companies and individuals, making it cheaper to export goods and services and to facilitate inward investment into the UK as well as overseas investment.

‘This in turn makes it cheaper to employ people, gives companies easier access to overseas markets – accessing new demand – and allows companies to reinvest profits in the UK.’

‘The special affinity of the Crown Dependencies and Overseas Territories towards the UK is a major advantage in directing inbound business for the City and the UK economy as a whole,’ said Step.

‘The global appeal of these territories as intermediaries for structuring insurance, funds and private-banking activities means that they facilitate collection and direction of significant investment of global capital into London markets.

‘It may be that other EU member states are conscious of the considerable advantage enjoyed by the City of London from its relationship with the Crown Dependencies and the Overseas Territories. If so, the UK might wish to guard against external efforts to drive a wedge into this symbiotic relationship.’

Step reaffirmed that Guernsey’s competitive position involved much more than low tax rates.

‘Consumers seek well-governed centres with market confidence in their regulation, low levels of corruption as well as competent and trustworthy professionals and courts.

‘These elements are key reasons for the success of the Crown Dependencies and many of the Overseas Territories.’