Guernsey's Policy & Resources Committee has published updated and detailed guidance on applying new tax law requirements to ensure companies that undertake certain highly mobile economic activities have sufficient economic substance on the island.
On 12 March, ECOFIN, the Council of Europe of Finance Ministers, reviewed the economic substance regime adopted by the States of Guernsey at the end of 2018. The EU concluded that Guernsey was a cooperative jurisdiction in respect of taxation, whitelisting the jurisdiction.
The additional detail published at the end of last week on how these rules work in practice builds on the guidance issued when the legislation was made.
The result of work between the governments of Guernsey, Jersey and the Isle of Man, this will ensure the approach taken on the application of economic substance rules between the islands will be consistent with each other.
The islands have also been working with the European Commission to ensure this approach remains consistent with the principle set down in the EU's Code of Conduct on Business Taxation.
Deputy Gavin St Pier (pictured), President of the Policy & Resources Committe, commented: "The economic substance rules addressed concerns raised by the EU in 2017 and were implemented in 2018. The Policy & Resources Committee are pleased to be able to offer greater clarity to the financial services sector and their clients on how the substance rules will work in practice.
"These economic substance rules are innovative and have ensured we received positive reviews of this regime against EU and OECD standards in March and July this year, respectively. We will continue to work to maintain our leadership role as a cooperative jurisdiction, in terms of tax transparency as well as against standards of fair taxation."
• For information, including a copy of the guidance, go to www.gov.gg/economicsubstance