Time for new strengths to shine through

A HISTORIC global agreement on corporate tax is being hailed as an ‘end to tax havens’.

So, although we will, as always, make it very clear that Guernsey isn’t one of those so-called tax havens, why is this island, and our fellow Crown Dependencies, backing the concept?

For more than 20 years Guernsey has been saying that it is not a tax haven. The island has shifted its sales pitch away from tax into expertise, and dependence on it has reduced, if not evaporated altogether.

Guernsey Finance’s marketing lines include reference to the island being ‘rightly proud of its record in combating harmful tax practices’, with early adoption of the Common Reporting Standard an example of this.

‘Guernsey will continue to take a constructive approach towards tackling tax evasion and secrecy and promoting transparency, and it is good to see this acknowledged by organisations such as the OECD,’ it continues.

So the island has long been waging an educational ‘war’ for hearts and minds over tax. One that it appears simply incapable of winning.

For every convert who gets it that the tax haven monicker is outdated and irrelevant, there will be hundreds of journalists, politicians, and experts, whether supported by knowledge or not, who will default to the ‘tax havens’ tag.

So the death of tax havens is to be welcomed? If no tax havens exist, then, by extension, Guernsey can no longer be one?

The offshore world is changing – and we can expect the OECD tax deal to accelerate that process.

Although Guernsey is unlikely to want to be seen at the head of any queue, one suspects the island’s financial services sector and politicians will be prepared to embrace the necessary change.

Moving away from a zero tax model will clearly be a positive step forward in rebuilding reputations.

Guernsey will just need to be careful that it negotiates this change to leave itself on the right side of the debate – and if ‘tax havens’ are indeed swept away, the island and its industry has been able to demonstrate sufficient change to be recognised for its new strengths, not its old reputation.

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