Taxation expert plays down fears about Trump
Fears that new US President Donald Trump may seriously damage Guernsey’s public finances have been downplayed by a local expert on international tax developments.
President Trump is understood to be looking to take the US out of the OECD’s new global tax rules designed to help address tax avoidance, ensure coherence of international tax rules, and, ultimately, a more transparent tax environment.
Tony Mancini, a recently-retired local accountancy tax partner, said that ultimately developments would depend on what President Trump wanted from taking this stance.
He said that if the US was to withdraw, the Pillar I elements of the deal were more likely to be at risk than Pillar II, global tax rules to ensure a minimum level of effective taxation for big international firms at 15%, which the States hopes could net the local exchequer some £30m. a year.
Pillar I, Mr Mancini said, was expected to have very little to no impact on the island. Pillar II rules are already in place in local law and are expected to start raising tax from 2027.
Mr Mancini said that President Trump appeared to be concerned about discriminatory levels of tax on US firms and individuals operating in other countries and wants to pursue an ‘America First’ trade policy.
‘The US is required to make changes to their laws and the Biden administration was doing that.
‘What Trump appears to be saying is that they are not prepared to do that unless there are some reciprocal benefits coming through.
'He is not convinced that this will help US businesses or that it is right for the US.
‘He will want to make it right for the US but right now that’s not going to change what we’re doing. We won’t be rolling back our rules. The EU has made the progress it has and it’s not going to stop because of anything in the US might do.
‘A good deal for the US might mean it doesn’t take part in Pillar II. But what that means for us is probably not a huge amount, with not having a great deal of US-owned business in Guernsey.’
US tax commentators have said that President Trump has made it clear that the country is not one of the driving forces in this global tax agreement, and would be seeking to revisit commitments made.
The position has been described as a ‘waiting game’.
