Tuesday 29 March 2016
In December 2015 the Policy Council established a Base-Erosion and Profit Shifting (BEPS) working party to assess the Organisation for Economic Co-operation and Development's (OECD's) October 2015 action plans, as well as to scrutinise the European Union Commission's 'BEPS Directive', which was published in late January 2016. The working party is chaired by Guernsey's Treasury & Resources Minister, Deputy Gavin St Pier, and comprises, inter-alia, Deputy Lyndon Trott (Chairman of Guernsey Finance) and Deputy Charles Parkinson, as well as tax professionals and representatives of the Institute of Directors and the Guernsey Society of Certified and Chartered Accountants. Representatives of the Guernsey Financial Services Commission are also participating in the working party.
Over the first part of 2016, work has focused on assessing the potential impact of the OECD action plans and the European Union Commission's Directive on the different sectors which comprise Guernsey's finance sector. This has drawn on the views and members of representative bodies such as the Guernsey International Business Association, the Guernsey International Insurance Association, the Guernsey Association of Trustees, the Guernsey Investment Funds Association and the Association of Guernsey Banks.
At this comparatively early stage, the working party has been able to arrive at a number of views that will help to inform the work that it does:
- That Guernsey is already largely compatible with the BEPS agenda due to its long-standing focus on business substance, and is now focusing on identifying opportunities for business, whilst acknowledging that there will be some challenges. Guernsey's finance sector model and regulatory framework is not particularly conducive to the island being exploited for base erosion and profit shifting and so ensures equivalent outcomes to those the OECD and European Union Commission are seeking to secure.
- Guernsey can maintain stability and competitiveness as well as a commitment to any new international standards.
- That Guernsey businesses are already actively considering how to respond to the new global standards that the BEPS agenda will establish, and that the States, through further consultation with industry, will actively play its part in that through putting in place appropriate legislation and regulatory policy.
- That the BEPS agenda is one that government and businesses in Guernsey supports, and will demonstrate that support through the new Policy & Resources Committee being recommended to formally commit to country by country reporting in May 2016.
Work will continue through the next few months of 2016 with different parts of the finance and wider business sector to fully assess the detail of the OECD action plans and 'BEPS Directive' and the steps that Guernsey will need to take.
It is also acknowledged that Guernsey, as a third country with a strong financial services sector, will be involved in the next 24 months in an EU/Code Group score boarding process that will assess third countries against the EU's updated good governance criteria. Guernsey welcomes this as an opportunity to further demonstrate that it clearly meets international good governance standards in relation to transparency, to automatic exchange of information, and to fair and competitive taxation.
Deputy Gavin St Pier, the Chair of the BEPS working party, commented:
"We are hugely grateful for the time and expertise offered by Guernsey's tax professionals and business bodies in assessing the potential impact of the BEPS action plans, and in helping us to consider the steps that we might need to take in the future. Guernsey is already in a leadership position on tax transparency, and we are also well-placed on the emerging new BEPS international standards. As these standards begin to be implemented, we are confident that we will be able to meet them while providing stability, competitiveness and opportunities for our finance sector."
