THE States of Guernsey is consulting the local finance industry about whether it should drop the withholding tax arrangement.
The move comes as the Isle of Man treasury minister Allan Bell confirmed that that Crown Dependency intended to move fully to automatic exchange of information in its application of the European Union Savings Directive from 1 July 2011, when the withholding tax option currently available to customers having accounts with Isle of Man banks as part of a transitional arrangement will be withdrawn.
And although the announcement was likely to have been an attempt to gain an advantage over its offshore rivals such as Guernsey, in terms of international tax cooperation, local government officials have confirmed that the States had already been discussing the issue before Mr Bell’s announcement, as the island’s own arrangement was always considered to be transitional.
‘The international climate is changing with regards to exchange of information,’ said Mike Brown, chief executive of the States of Guernsey (pictured).
‘We are fully aware of those developments and have had the position under review for some time.
‘Guernsey’s commitment to the highest international standards in transparency is constant.’
The island’s current situation with EU member states is that since July 2005 financial intermediaries in Guernsey have collected a withholding tax, called a ‘retention tax’, on certain types of payment, principally interest, made to residents of an EU country, unless they opt to exchange information with the tax authorities in their country of residence.
It is currently estimated that approximately three-quarters of such investments are already subject to the exchange of information option.
The rate of retention tax rose from 15% to 20% in July 2008 and is due to rise to 35% from July 2011.
Of that 20% it currently collects, the island retains 25% and remits 75% to the appropriate jurisdiction.
Mr Bell said the Isle of Man’s move to automatic information exchange signalled that their name was ‘associated with probity and foresight’.
The change has reportedly got the support of the private sector although he acknowledged ‘there will always be voices of dissent’.
Article posted on 29th June, 2009 - 2.30pm
One Article Comment
We must make the announcement soon that we are following this lead.
E&Y’s Graham Parrott has today stated why, but what is worrying is his admission that Guernsey would lose deposits/investments because of this.
It proves that there is money in Guernsey that its owners wish to keep hidden from whatever European tax authority has the right to know about it.
This is something we have facilitated for decades.
I have been told many times how wrong my opinion that this was going on, was.
Those in the finance industry that comment on this have been proved disingenuous.
Adopting auto exchange is an excellent progression and a small victory for those that campaign for tax compliance. Even a short while ago this would have been laughed out of town.
Implement it now.
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