Shareholders in Guernsey companies will not have to pay 'retrospective' tax

TREASURY has dropped plans to target Guernsey resident company shareholders to try to recover millions of pounds of tax which will be lost through scrapping the deemed distribution element of zero-10.

Following Guernsey Press inquiries, Treasury and Resources minister Gavin St Pier yesterday confirmed that his department had consulted local tax specialists as it examined potential ways it could recoup some of the expected £3m.-£4m. loss when deemed distribution ends on 1 January.

'Over the past few weeks, a potential option of taxing shareholders on undistributed profits accumulated since the introduction of the zero-10 corporate tax regime has been under consideration by the Treasury and Resources board,' Deputy St Pier said.

As part of zero-10, Guernsey introduced rules to tax locally-resident shareholders at set trigger points when - although there had been no dividend payment - income would be considered to have been released (deemed distribution).

Trigger points were events such as the shareholder moving off-island or dying. Deputies voted to get rid of deemed distribution after the EU ruled it was harmful.