GUERNSEY will have to follow Jersey in the automatic disclosure of tax information, according to a top adviser.
With the Isle of Man leading the way and Jersey announcing that it would also sign the Tax Information Agreement, Ernst & Young tax partner Graham Parrott (pictured) said that Guernsey could not be seen to tolerate secrecy when the other Crown Dependencies were not and would, politically, have to follow suit.
‘We have no choice,’ he said. ‘If we don’t follow the same stance as the others, it will be counterproductive. We will make a bit less money. It’s a few million pounds and some people will probably move their funds. It’s so easy to move your money around.’
Currently Guernsey operates a retention tax system whereby those outside the island who have invested their money here can either have their details revealed to their home country or stay anonymous and pay 20% tax on what they earn. Guernsey keeps a quarter of what is retained. The tax is due to increase to 35% in July 2011.
But the Isle of Man was the first to announce last week that it would be withdrawing the retention tax option, with Jersey later declaring that it, too, was falling into line.
By July 2011, the Isle of Man will move to a system of automatic disclosure of tax information. Jersey said that it hoped to adopt the changes by January that year.
‘The biggest issue would apply to payment to EU-resident individuals,’ said Mr Parrott. ‘Those exercising the directive is a much bigger issue for the island.
‘It’s about extending the scope. It only applies to the EU, so they could move their money to Singapore. It doesn’t stop people putting their money outside of the EU, which I think is more of a concern.’
Article posted on 2nd July, 2009 - 2.30pm
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