US President to force end of Jersey and Guernsey's ‘Zero Ten’ tax system

The tax system that has underpinned the international competitiveness of Jersey and Guernsey for more than a decade is set to be axed on the orders of US President Joe Biden.

At the moment, the 'zero ten' system sees most companies locally pay 0% corporation tax on their profits, and financial institutions pay 10%.

President Biden is calling on the G7 group, made up of the world’s richest nations, to agree a new global minimum tax rate of 15% as part of a crackdown on multi-national firms who base themselves in low tax jurisdictions to reduce their bills.

ITV News has seen evidence of discussions between the governments of Jersey and Guernsey, and the OECD which manages global tax rules, and anticipates there will need to be a change if the G7 agree a deal in the coming days.

It could mean all local firms that currently pay no tax on profits may have to pay a 15% rate in future.

But Jersey’s External Relations Minister, Senator Ian Gorst, insists the island has not been forced to make any change.

Guernsey’s government says it continues to fulfil its global obligations.

Those working in the finance industry have mixed views on its potential impact. Finance accounts for around 40% of all the money generated in the economies of both Guernsey and Jersey, employing around 20,000 people across both islands. 

The G7 meeting to discuss tax changes is due to happen on Friday 4 June ahead of the G7 world leaders summit in Cornwall next week.