The States of Guernsey has announced that the Economic and Financial Affairs Council of the European Union (ECOFIN) has reaffirmed its previous decision that Guernsey is a cooperative jurisdiction with respect to tax good governance.
ECOFIN has published an updated EU list of non-cooperative jurisdictions and confirmed that Guernsey is not one of them. This is on the basis that Guernsey has met its commitment to address general concerns raised by the EU in 2017 in relation to legal economic substance requirements. This confirms that not only does Guernsey meet the international standards of tax transparency, the principles of fair taxation and is committed to fighting base erosion and profit shifting, but now also addresses any concerns that profits were not commensurate with the actual economic substance in the island.
A media release issued by the States of Guernsey states: ‘ECOFIN’s decision also follows a further commitment made by Guernsey in December 2018 to work with the EU on sharing beneficial ownership information, such as through an integrated platform.
‘The legislation introduced in Guernsey to meet this commitment to further demonstrate economic substance by 31 December 2018 was assessed by the EU’s Code of Conduct Group (Business Taxation) (‘the Code Group’) in January 2019. The Code Group recommended that it be recognised that Guernsey has met its commitments to implement tax good governance principles. This was agreed by ECOFIN at its meeting held on 12 March 2019.’
Deputy Gavin St Pier said:
“I welcome this decision. I was confident that any objective process would produce this outcome. We have consistently maintained as a matter of fact, that we are a jurisdiction of substance. We have worked closely with the EU, Jersey and the Isle of Man to demonstrate the existence of robust legal substance.
“I hope that it is now clear to EU Member States that they can have confidence in the work of the Code Group and consequently there is no further role for national blacklists, the basis of which are often arbitrary and prepared without any dialogue.
“As we have repeatedly said, including most recently to UK MPs in another context, Guernsey does not facilitate financial crime, including tax fraud. We adopt the highest standards and we are willing to cooperate with our neighbours to address reasonable concerns. We remain committed to ongoing co-operation and dialogue with the EU institutions. We stand ready help other jurisdictions, including any relevant EU Member States, develop and implement substance requirements.”