EU zero-10 review is earlier than expected
Saturday 29th October 2011, 12:01AM BST.
GUERNSEY’S zero-10 corporate tax regime is under review by Europe.
The island has just been informed by HM Treasury about the decision of the EU Code of Conduct Group to recommence the review when it met on 20 October.
Jersey and the Isle of Man’s zero-10 regimes have already been reviewed and found non-compliant with the code, which is in place to ensure fair tax competition.
Both jurisdictions have since made changes to their regimes that have found favour with the code group, but still need to be endorsed by European finance ministers when they meet as ECOFIN on 30 November.
‘We acknowledge the decision to re-commence the review process for Guernsey, although we would not have expected that decision to have been taken ahead of the ECOFIN meeting on 30 November,’ said Chief Minister Lyndon Trott (pictured).
‘That said, the process of review itself is one that we support in principle and we will be engaging fully with the Code Group during the review to ensure that the Code Group comes to an informed and evidence-based decision about Guernsey’s corporate tax regime.’
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“Deputy Bell described completing the process of taxation reform to establish the zero-10 regime as his highlight of the political year.
‘My outstanding success for the year has been establishing all the guidelines and legislation for zero-10. We move into next year with zero-10 in place and all the indications are that zero-10 is working.
‘All the indications are that we remain an attractive jurisdiction. A lot of people are coming, bringing their businesses and their money to Guernsey and that’s something where we could have gone wrong, we could have been in a situation where we found people leaving. We’re doing well and zero-10 is working”.
No Disrespect to Deputy Bell
he was only one of many
But
OOOPS !!
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It seems that the right hand doesn’t know what the left hand is doing and for Guernsey this is becoming a shambles.
So what did we gain exactly by not having a review in the first place along with Jersey and the isle of Man, it appears nothing.
Once again we are about to totally submit ourselves to an outside jurisdiction who will dictate the terms.
I thought we were going to carry out our own review and come up with something that suited us but was also compliant and would satisfy the EU.
We’ve been fudging all along, hoping that Jersey and the isle of Man would take the flack and we would step in with our new compliant version of zero ten.
Why don’t we tell the EU straight that we are not prepared to accept the review until after ECOFIN meets in November.
Lets hope our leaders have the strength of character to stand by the principals the Chief Minister continually quoted when zero ten was introduced:
In his address to the States on the debate on 0/10, on the 28th June 2006 he finished by bringing out five key tests;
1) Does this package of proposals keep our economy strong and competitive?
2) Does this package protect the lower paid and those on fixed income?
3) Does this package minimise the impact on middle earners?
4) Is this package deliverable and is it compliant with international standards?
5) And Finally, does it feel right?
Easy words, more difficult to stand by them.
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Gary
You seem to be overlooking the fact that’s impossible to predict what’s going to come out of the EU, or when. If you think we should be able to predict that, then please pass in your pearls of wisdom to David Cameron as he’s certainly struggling on that front.
Our politicians may be guilty of several things but don’t blame them for things that they cannot possibly control. You seem like the sort of person who would be equally happy to blame them if we HAD jumped the gun and changed our tax strategy when there might have been no need to do so. Hindsight is a wonderful thing.
Maybe you don’t understand the effect of being uncompetitive in the international tax world. Or maybe you cannot resist having yet another go at our CM. Let’s face it, you’ve got rather a lot of previous form there.
The only thing that Guernsey has got wrong re zero-10 is making a premature statement about a presumptive 10% stake. It just wasn’t necessary.
Of far more importance now is what happens with the Euro and the EU, and whether the UK joins the 17 who are “right in” or stays as one of the 10 who remain on the edges. If the UK fully commits then we are going to be facing some really serious challenges which could render zero-10 pretty irrelevant.
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GM
I felt that we jumped into zero ten far too fast in the first place, My thoughts were well known as a critic in those early days. Deputy Matthews idea of a years delay would have been the right way forward and saved us a lot of money. I felt Deputy Parkinson’s ideas were the better of the two, although neither would have been the way we really wanted to go, but yes, we had to remain competitive.
We followed UK Treasury advice and the States went for zero ten. We need to be very careful of UK treasury advice, they tend to be looking after the best interests of the UK Goverment for the most part and we are incidental.
No I would not have jumped the gun, I would have allowed us to be reviewed at the same time as Jersey and the Isle of Man, we’ve gained nothing, by not doing so.
Yes I have previons for having a go, as you put it, at the CM, but only where I think critisism is needed, he tends to lead this island up the garden path on occasions and in this case he doesn’t really appear to know where he is.
The only statement he is making at present is the obvious one. We will end up with very similar tax structures to Jersey and the Isle of man, obvious to most people as we have been sitting on the fence awaiting the EU results for those two Jurisdictions so as we can match them, if they were deemed compliant.
If we were expecting the EU to wait for November, after the ECOFIN meeting, why were we not making that clear to them, after all we now have an Office in Brussels with Highly paid staff who are meant to be keeping us right up to date with the current situations.
But this appears to have caught us on the hop again.
I don’t think we really know where we are and instead of saying so, we are being fudged off with political blather.
Your absolutly right over Europe, no one knows at present what will happen tomorrow, there is no easy answer.
No I’m sorry GM, this is becoming a bit of a shambles.
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GM. What on Earth are you talking about:- “Of far more importance now is what happens with the Euro and the EU, and whether the UK joins the 17 who are ‘right in’ or stays as one of the 10 who remain on the edges.”? Pure fantasy. Joining the 17 countries of the inner-circle would mean the UK adopting the Euro currency. That’s never going to happen now (thank goodness). They are either in the second-tier 10 or out altogether, that’s the UK’s choice going forward. Closer fiscal union in the next two years will lead to changes in EU treaties, which in turn will precipitate referendums, and the UK will vote to come out of the EUSSR entirely. That’s my prediction, for what it’s worth. But the UK joining the Euro? Honestly! That ship sailed long ago.
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Gary
We didn’t jumbo into zero-10 too soon. Dithering would have cost us our competiveness. Maybe we could have waited a year. If somebody more credible than Deputy Mathews had driven it then maybe it would have been accepted. However, the public spending culture at that time was such that the extra tax revenue would inevitably have been spent or wasted, not saved, so I doubt that we would be much better off!
Don’t be fooled into thinking that the UK Treasury aren’t on our side. The City needs “offshore”. The UK has to strike the right balance with keeping Brussels happy.
However, Jersey and to a slightly lesser extent the Isle of Man have repeatedly rubbed the UK and Brussels up the wrong way over the past 2 or 3 years. Guernsey has played a blinder where that’s concerned. Will it have got us anywhere? Time will tell but things are changing so quickly in the EU that it’s impossible to predict.
I agree with you that the timing of this latest review has caught us by surprise. On the other hand it shouldn’t have been so surprising after we made it clear that we would side with Jersey and the Isle of Man after their recent favourable decision from the Code of Conduct.
Is it really a shambles though? A shambles would suggest that it’s a result of our own ineptitude and that’s simply not the case. Yes we could commit to a strategy to provide certainty which is out of kilter with Jersey and the Isle of Man but if that made us uncompetitive then it’s a huge own goal.
My own view is that Jersey and the Isle of Man are currently in severe financial trouble, albeit for slightly different reasons but driven mainly by zero-10. Guernsey isn’t yet in such trouble, due to good financial leadership over the past 5 years, and don’t forget that we haven’t needed to introduce GST yet. But surely it makes sense to remember that the Isle of Man led the race to the bottom, funded by their now-obsolete UK VAT subsidy, and they wouldn’t have been able to achieve that without that subsidy. The three islands should forget all about undercutting each other as it’s a false economy. A common 10% corporate tax rate based on a territorial tax system would serve us all perfectly.
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Indignados
Don’t worry – I’m not for one moment suggesting that the UK should join the Euro. I’m more anti-EU and anti-Euro than most! I’m just concerned that those at the core of the 17 are getting closer together in fiscal harmonisation terms and that could lead to all kinds of new challenges.
Where does Guernsey stand re our existing rights in Europe if the UK pulls out of the EU, bearing in mind that we only have our existing rights due to Protocol 3 to the 1972 Treaty of Rome when the UK joined?
Has anybody considered the absurdity of the UK signing a joint armed services agreement with the French when in a couple of years time we could be in a very different and indeed awkward political relationship with them?
One key question – why is the UK government so desperate to avoid a referendum? They know exactly what the answer is going to be. Is Cameron not yet convinced of the outcome and wants things to get worse re the EU and Euro to make absolutely certain of the UK pulling out, or is he desperate to stay in but on the UK’s terms only?
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GM
well we will have to agree to disagree on certain aspects of this situation.
The one area we have common ground on is your last sentence:
“A common 10% corporate tax rate based on a territorial tax system would serve us all perfectly.”
This is where all three jurisdictions should be getting together and agreeing on a common strategy and then push that strategy with the UK and EU review group. But it needs a strong leader to force the issue and pull them together and as i said before, all i see is political fudge,it seems to be, from guernsey’s end especially, lets wait and see what happens.
We all know we will end up with similar tax regimes, so i personally don’t see the problem in a little cooperation. There is enough business out there to go around and with, but what is needed is some certainty, there’s little at present.
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Guernsey can well afford 10 below Zero, without it, we’ll be off, sort it out. Who provides for the States Members, who has the biggest charity Balls ?
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Toni Bandinee,
“Guernsey can well afford 10 below zero.”
Are you saying we pay those on the zero end of 10 to stay?
Whose bottom end of society gets poorer by the day while taxes and cost of living rises well above their increases in earnings.Guernsey is becoming an extremely unbalanced society.
Who provides for the States members ??? Certainly not the finance industry.
“Who has the biggest Charity balls.”
How condescending can you get.
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We were told throughout the “Matthews” zero-ten “debate” that stability and certainty were vital. There could be no change. We have had neither stability nor certainty in reality. Attempts to dupe or wrong-foot our neighbours in Europe, whether presented directly or via Whitehall, will only ever be seen as such.
We seemingly obtained a delayed review, by declaring that our system would change (based on someone’s guess at that stage that IOM/Jersey would be ruled wholly uncompliant) and announcing a presumptive ten percent rate.
Then, once Jersey and IOM were deemed “only a bit non-compliant” the presumption of a 10 percent corporate rate is apparently being abandoned, in favour of keeping zero-ten! Hang, I almost expected an invasion fleet, so obvious seemed the one-fingered salute.
From the OECD and European perspectives, our attitudes to removing harmful tax practices must appear rather amateur, ill-thought out and wholly opportunistic.
As to Jersey being more annoying than Guernsey to EU/UK, well, we have pretended to be closed to new VAT-dodging internet sales business, while quietly encouraging it; we are becoming a centre for tax-free gambling and are an entrepot for untested, unlicensed vitamin supplements (read drugs). Is’nt that nice of us. Just because our lot ask the UK which side of the boot they’d want licked, doesn’t mean we are any the more respected for it. Probably the contrary.
We unlawfully excluded the UK fishing fleet, too. Hardly the stuff of a cosy, special, protective relationship!
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GM
Your beginning to sound like Dave Jones?
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Everyone STAY CALM, what ever happens the pesants will continue to pay to support the banksters and money launderers through stealth taxes, tax fines and surcharges. After all what will the pesants do….. leave lol
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Tony Bandy knee, hope it gets better!
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Sam
I sincerely hope not!
However, as the EU is becoming a bigger basket-case by the hour, I don’t disagree with Dave Jones on the wisdom of making sure that we do not get any closer to it!
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Tick Tock Tick Tock
The gravy Train is coming to a end PEEPS
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Kick out finance its the worst thing that’s ever happened to guernsey .If Lyndon Trott and his cronneys like it that much move to Hong Kong and leave us true guerns alone its going to crash anyway Guernsey can survive with out it .
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