The government of Guernsey has launched a public consultation on a proposal to require companies engaging in certain business activities to meet substance requirements before being considered tax-resident in Guernsey.
The proposal responds to pressure being applied by the Council of the European Union’s Code of Conduct Group aimed at curbing harmful tax competition.
The Code of Conduct Group in November 2017 expressed concern the Gurnsey’s lack of a legal substance requirement increased the risk that profits registered in the jurisdiction are not commensurate with economic activities and substantial economic presence.
The new proposal would require that companies involved in the following business activities that claim to be tax resident in Guernsey to demonstrate that they meet minimum substance requirements as part of their annual tax return:
- Banking
- Insurance
- Fund management
- Financing and leasing
- Shipping
- Intellectual property
- Collective investment vehicles
- Holding companies that generate income from any of these key activities
The substance requirements would be different for the different activities and are described in the consultation document, which is an online survey.
The government said that it anticipates that the new substance requirements would apply in 2019.
The consultation runs until August 31.
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