MPs hear of Guernsey's robust stance against tax avoidance
GUERNSEY has ‘no desire or need’ to harbour abusive tax avoidance schemes – and is part of the ‘solution’ to the issue, UK politicians have been told.
In robust evidence to MPs investigating tax evasion, the States also stressed that the island was not used for ‘profit shifting’ in the way that it was seen in places such as Ireland and Luxembourg.
The States voluntarily provided the evidence to the House of Commons Treasury sub-committee and said it would be happy to provide oral evidence as well.
‘Guernsey recognises the need to maximise tax revenues, by reducing tax evasion and fraud, and to prevent abusive tax avoidance. The island has no desire, or need, to harbour abusive schemes and will continue to work with international tax authorities to eliminate them,’ said the States, in their evidence to the committee.
It said that the island was transparent, committed to European Union principles of fair taxation and supported principles of a level playing field. ‘Guernsey has a robust stance against tax avoidance.’
As a recognised ‘reliable, active and co-operative partner of the UK, the high quality of data that Guernsey provided helped the UK authorities tackle tax evasion and apply its own general anti-avoidance rules. The island’s ‘effective’ central register of beneficial ownership of companies and agreements on sharing information with UK law enforcement agencies was highlighted as an example of such co-operation amid calls from some UK MPs to make it public. ‘Guernsey will move to a public register of beneficial ownership if that becomes an international standard; there must be a level playing field,’ added the evidence.
The use of pejorative terms such as ‘tax haven’ without definition also came in for criticism. ‘This fails to distinguish those jurisdictions that are co-operative and form part of the solution (such as Guernsey) from those that fail to meet international standards. By a number of objective measures, reports and assessments, Guernsey has been validated as being well-regulated, transparent and co-operative.’
On tax policy, the States said that it was grounded in the desire to be a ‘good neighbour’ to the UK and EU – with the island continuing to work closely with both. British MPs were also told that Guernsey was not on an EU list of non-cooperative jurisdictions. ‘The island’s tax policy is designed to prevent double taxation,’ said the evidence. ‘Guernsey is not used for profit shifting and transfer pricing to the extent experienced by other jurisdictions, such as Ireland and Luxembourg.’
However, the island was playing a ‘full and active role’ in implementing global standards to address the issue. These included the Organisation for Economic Co-operation and Development’s – of which Guernsey is a member - base erosion and profit shifting inclusive framework. ‘This helps to ensure profits are taxed where the economic activity that generates them is carried out and where the value is created.’ Tax crime was an offence, said the States, with ‘no allowances or exemptions of the sort found in many other countries; which have the effect of producing effective rates of corporate tax much lower than the headline rate there. This provides for simple tax structures. Guernsey has little need of “tax rulings” of the kind found in other jurisdictions’.