EXCLUDING the funds industry from the expansion of the 10% corporate tax band could pay huge dividends to the sector in the island.

Ernst & Young tax partner Graham Parrott said that the move the Treasury and Resources Department proposed in its 2013 Budget could make Guernsey ‘the home of the fund’.

The department plans to increase the scope of 10% corporate taxation to regulated fiduciary companies, insurance companies doing domestic business, insurance company managers, and regulated insurance intermediaries, to make up an income shortfall following the withdrawal of deemed distribution provisions under the zero-10 tax regime.

‘We do need to look to grow and this, combined with maintaining the general rate of zero, should enable the island to maintain its position at the forefront of the financial services industry, while making a contribution to addressing the deficit,’ said Mr Parrott.