Tuesday 05 December 2017
Guernsey has welcomed formal reaffirmation from the EU Council of Finance Ministers (ECOFIN) that it is a cooperative jurisdiction, following Commissioner Pierre Moscovici's statement to that effect in 2016.
The decision to reaffirm that status, made by finance ministers in Brussels on 5 December, was recommended by the EU's Code of Conduct Group on Business Taxation ('Code Group'), with whom the government of Guernsey has been actively engaged in an evaluation process through 2017.
Deputy Gavin St Pier, the President of the Policy & Resources Committee said:
"This clear reaffirmation from the EU that Guernsey is a cooperative jurisdiction is very welcome, fully justified and should be of no surprise to anyone who knows us.
"As part of our commitment to meeting international standards, Guernsey has for many years engaged willingly with the EU and the Organisation for Economic Cooperation and Development (OECD) on tax transparency and economic substance, and has taken a number significant steps to demonstrate its active commitment to both. This latest process has rightly recognised this.
"Guernsey has long called for a fair, consistent and objective EU approach in its treatment of both EU and non-EU jurisdictions. I am heartened that EU Tax Commissioner Moscovici, who I met in Brussels just a couple of weeks ago, has publicly called for the new EU list to replace the outdated and inconsistent national "blacklists" maintained by some EU Member States.
"The evaluation process has led to the Code Group setting out a number of broad areas where it would like cooperative non-EU jurisdictions, such as ours, to take further steps to support economic substance. Guernsey is already committed to the OECD's anti-Base Erosion and Profit Shifting (BEPS) action plan on economic substance, has put in place country-by-country reporting, and in June of this year was a signatory to the BEPS multi-lateral instrument.
"We look forward to engaging directly with the Code Group early in 2018 in order to identify steps to further strengthen our approach to economic substance. We are committed to ensuring that we implement those steps in the next 12 months.
"We welcome the agreement at the recent Global Forum Plenary to establish a voluntary group comprising the interested members of the Global Forum, the BEPS Inclusive Framework and the EU Code of Conduct Group to work together to ensure an objective and consistent understanding and application of the criteria used by the EU on the basis of the principle of level playing field, and to draw on the work of the Global Forum and of the OECD Forum on Harmful Tax Practices. This level playing field should include consideration of application to the EU Member States themselves.
"Guernsey is choosing to continue to meet EU tax good governance standards. This means that there should be no reason for the EU to have concerns over Guernsey as a location into which the European Investment Fund can continue to comfortably invest, nor to have any tax related concerns when considering our access to the EU market in the future on the basis of equivalence, when provided for in EU legislation. We therefore also hope too that the Commission will soon grant the AIFMD third country passport which the European Securities and Markets Authority has recommended.
"Guernsey has demonstrated that it is possible to balance transparency with privacy, and economic substance with competitiveness. We will maintain that approach."
The Code Group's screening process initially involved 92 non-EU countries and jurisdictions. Guernsey made a detailed technical submission to the Code Group in July 2017. In November 2017 the Code Group and Guernsey's Policy & Resources Committee agreed to take further steps in 2018 on economic substance in order to meet the EU's emerging standards. Discussions on those steps are expected to commence in January 2018. Deputy St Pier will be providing a statement to Guernsey's parliamentary assembly next week.
Deputy Lyndon Trott, Vice-President of the Policy & Resources Committee said:
"We are a good neighbour and trading partner to the EU, providing a vital role in ensuring the efficiency of global capital markets, including as a funnel for foreign direct investment into the EU and UK. We have nothing to hide, and we can be proud of our contribution to the UK's economy directly and its exchequer indirectly. Our funds sector funnels £25bn of foreign direct investment into the UK strengthening its capital account; the UK financial services industry receives significant revenues on the back of our finance sector - £1.1bn from investment management fees alone, strengthening the UK's current account. Tens of thousands of UK jobs - contributing to the UK exchequer - depend on what we do and our doing it well. We are working closely with CityUK, and it is understood that we are a vital part of the UK's post-Brexit prosperity.
"However we also make a strong contribution to the EU capital market, and investment in infrastructure across Europe, and I am pleased that the work we have been doing in Brussels since establishing the Channel Islands Brussels Office in 2011 is helping to ensure that our positive role is understood by EU Member States. It is very clear from the feedback that both Deputy St Pier and I have had from our recent visits, that Guernsey's active engagement and presence in Brussels is appreciated, welcomed and is absolutely essential to represent our interests - and we will need to continue this commitment and investment for the foreseeable future, particularly with Brexit looming."
