G7 tax reforms 'a challenge to the very core' of Jersey and Guernsey
A leading tax reform campaigner is calling on the governments of Jersey and Guernsey to rethink the way the islands’ financial sectors operate in the wake of a new global crackdown on tax avoidance.
The G7 group of the world’s richest nations have agreed in principle a new global minimum 15% rate of corporation tax designed, primarily, to stop the world’s largest multi-national companies reducing their tax liabilities by setting up bases in low tax locations.
Last week ITV News reported it could lead to the end of Jersey and Guernsey’s current “zero ten” tax system which sees most companies based in the islands pay 0% corporation tax, with financial services companies paying 10%.
Richard Murphy of Tax Justice UK has described the G7 announcement as of “huge significance” to Jersey and Guernsey and has issued a direct challenge to each islands’ Chief Ministers.
Both Jersey and Guernsey’s governments have repeatedly rejected the claim the islands are tax havens, pointing out they are compliant with global standards.
But Guernsey’s former Chief Minister, Deputy Gavin St Pier, has described the G7 announcement as either “the end or the beginning of the end” of the current zero ten tax system.
Jersey’s External Relations Minister, Senator Ian Gorst, says the world is moving to “a new global standard” for corporation tax and that the island would make decisions one the G7 have finalised their proposals.
Mr Murphy says those in Guernsey and Jersey who are claiming the islands will be unaffected by the announcement are wrong.
Guernsey's Chief Minister Peter Ferbrache has said, meanwhile, that "wiser heads" from the corporate and finance sectors are needed to advise politicians on the consequences.