LISTEN: Territorial tax system could replace zero-10

But Harry Dick-Cleland, chairman of Cleland & Co chartered accountants, said such a step would have to be taken in unison with Jersey and Guernsey at the same.

He was speaking during a discussion on the Guernsey Press business podcast about the prospect of an international tax overhaul.

Listen below:

Changes to ensure tech giants pay their perceived fair share of tax and a minimum 15% corporation tax rate were backed by G7 countries, which include the UK and the US, with some speculating it could be the end of Guernsey’s zero-10 regime.

Asked if there could be some benefits from a global tax shake-up, Mr Dick-Cleland said: ‘Yes, I think that could be because my initial reaction to this was, if it becomes reality, then that’s the time that we do adopt a territorial tax system – which all three jurisdictions have to do at exactly the same time. So it’s vital that Jersey, Guernsey and the Isle of Man stick together.’

Mr Dick-Cleland, a fellow of the Institute of Chartered Accountants in England & Wales, added: ‘This is something that all three islands must do at exactly the same time. ‘We do all need money. And a territorial tax system where you’re taxed on Guernsey-sourced income – whatever that rate will be, people can decide in the future – but I just think that solves one hell of a lot of issues.

‘And then we could just say to anybody that’s going to attack us in future: “Well go away, because we’re not a zero tax jurisdiction any more”.’

The podcast also featured David Piesing, director, head of wealth structuring, PraxisIFM Trust, who said he suspected that the zero-10 regime was probably dead, not necessarily immediately, but in the years ahead.

‘I agree with the view that a territorial tax system seems the likeliest way forward for the islands. The three islands, as has been mentioned, really need to do this in tandem. And I think we have to ensure that there is no fragmentation there,’ he added.

‘What happened in 2007/2008 when the Isle of Man broke rank and led the race to the bottom really forced Guernsey and Jersey to go down a certain route. And that has cost all three islands a lot of money, or it took a long time to regain the money that was lost by doing so.’

He also noted a lot of companies had already moved out of the zero tax bracket.

‘Zero-10, I’m sure, is going to come under considerable pressure. But what we may well end up with is something that’s a lot more sustainable going forward and less prone to attack.’

Hayley Camp, risk and compliance director at EPEA Fund Services (Guernsey), told the podcast that the international tax overhaul was aimed at tech giants, while Guernsey had always set itself out as a good global citizen.

‘I’ve every confidence that we will meet this in a well-informed, well-judged way and continue to take our place as a good citizen,’ she said.