In a statement to the States of Deliberation he said the formal assessments of Jersey and the Isle of Man, and a delay to the informal assessment of Gibraltar’s territorial regime, have precluded any conclusion to the review of the tax regime "and as such we have still to present any final analysis or conclusions".
Trott said: "Our strategy, rather than a default to an ‘all or nothing’ approach, has meant that today we are still in the position of being able to form a considered assessment of the best course of action in the short and medium-term interests of Guernsey.”
On the question of Jersey and the Isle of Man, he said that in September the EU Code of Conduct Group on Business Taxation assessed proposals by Jersey and the Isle of Man to revise their zero-10 corporate tax regimes to conform to the EU Code of Conduct on Business Taxation. Those proposals were the removal of the deemed distribution and Attribution Regime for Individuals mechanisms of the jurisdictions’ corporate tax regimes.
“The Code Group took the view that by removing these features of the two tax regimes they would become compliant with the Code of Conduct on Business Taxation principles”
He said the UK had previously stated that, in principle, and without the use of any other anti-avoidance measures, a zero-10 regime on its own, without deemed distributions could well be Code compliant but that the view of other key member states would be key in the formal assessment.
“As is now apparent, the views of the other member states in the Code Group are now aligned with those of the UK. That decision now awaits a final decision and ratification by The European Council of Finance Ministers.
“Code Group had stated that it viewed the regimes ‘as a whole’ as harmful and it had made very clear that it viewed any attempt to replicate the effects of deemed distributions through the use of other anti-avoidance procedures unacceptable.
“What is now apparent is that the assurances given by both Jersey and the Isle of Man that no attempt will be made to replicate the effects of deemed distributions through general anti avoidance rules have been accepted.”
Turning to Gibraltar he highlighted another reason for the delay. He said the UK had separately stated that it would support the introduction of a territorial regime in the Crown Dependencies, as it had for Gibraltar, and that Gibraltar’s new territorial regime will be informally assessed by the Code Group in September. “However, we now know that the informal assessment of Gibraltar’s territorial regime did not take place on 13 September, as had been expected, and has been deferred until later this year.”
Once both these assessments were completed, “Guernsey would then have sufficient clarity on the views of the Code Group on both the zero-10 and the Gibraltar territorial regime for our own evaluation of all of our options to be undertaken and that until then, any decision and accompanying publication of any Green Paper on our own direction of travel, would be premature.”
He was mindful of any effects any decision would have on the economy of Guernsey. “Guernsey will not, through either the timing of any implementation process or indeed the review process itself, undermine our economy by placing it at a competitive disadvantage to other jurisdictions.”
Trott said that the island’s approach had been thorough, holding discussions with the Code Group, with Commission officials and with UK Ministers and officials. “However, we have gone further and have had discussions with other key member states to assess what reciprocal benefits might be associated with
