Corporate tax reform plan set for consultation
BBCThe man leading a review of how much tax Guernsey receives from businesses says islanders are to be asked their views on the introduction of a proposed new 10% or 15% rate of corporate tax.
Deputy Charles Parkinson said the consultation into taxes was set to begin on Friday.
The tax review sub-committee, which he leads, is set to return to the States with full proposals for tax reform before the end of June, including whether to introduce a goods and services tax (GST).
The States is set to debate plans for GST next month, which could see a 5% rate to include food, or a 6% rate if food is excluded.
Policy and Resources (P&R) member Parkinson has been a long-time critic of the island's current corporate tax regime and came third at 2025's general election.
Since 2008, most companies in Guernsey have paid no tax on their profits, while certain finance businesses in banking, fiduciary services, and insurance have been taxed at 10%, under a regime known as 0/10.
There also some businesses that fall into a 15% or 20% band of tax.
Parkinson attempted to change the island's corporate tax regime in 2023, but failed.
In June last year, outgoing Chief Minister Lyndon Trott warned the States against making changes to corporate tax without moving in line with other jurisdictions like Jersey and the Isle of Man.
The island's business representative groups, like the Guernsey International Business Association, have consistently argued against changing corporate tax.
Delivering tax reform has been proposed as one of the States' "super priorities" for this term, as part of P&R's government work plan.
What could the corporate tax changes be?
There are several options that could be voted in, two of them would be a new 10% or 15% corporate tax rate.
However, Parkinson said: "One option would be to widen the 15% and 20% bands to include other business that are not already in those bands.
"Another option would be - at the moment the tax rate is determined by the actual business that's being undertaken, it's not by the company.
"We say company X has to pay tax on certain steams of income, Jersey taxes the company on all of the income, if it's within the scope of that band, that's another option for us."
Parkinson said he wanted to hear from businesses regarding the options in the tax consultation package, adding there would also be an opportunity for the general public to have its say.
Who is working on plans for corporate tax reform?
The tax review sub-committee was created by P&R and consists of:
- Deputy Charles Parkinson (chair)
- Deputy Gavin St Pier
- Bill Dodwell
- Mike Williams
- Peter Harris
- Tony Mancini
It is considering how companies are taxed and whether a system of territorial corporate tax should be implemented.
Alongside that, it is reviewing a package that was agreed by States members in November 2024 that included plans for a 5% GST, which could now become the 6% GST option instead. It is also looking at a lower income tax rate for earnings under £32,400, an increase to income tax allowances, and a restructuring of social security contributions.
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