Country Rankings - Guernsey
Feb 06, 2018 Guernsey: preparedAmid the usual noise surrounding the Brexit negotiations, another couple of news stories caught my eye recently. And they suggest that the Channel Islands of Guernsey and Jersey are facing the prospect of Brexit with far more confidence, and a greater level of preparation, than their mother country. Indeed, the UK finance sector is said to be learning from Guernsey, according to the island's investment promotion agency, while the recent decision by Canadian energy firm Serinus to redomicile in Jersey was an important vote of confidence in a jurisdiction which not so long ago was facing an existential crisis as a result of the UK's decision to leave the EU. Of course, things aren't exactly what they appear at first glance. The Channel Islands have similar, but largely unique, relationships with the EU, in that they aren't member states but belong to the customs union. However, neither belongs to the VAT area, and both have harmonized elements of their legislation with EU law. Therefore, they've had had long experience of dealing with the bloc as third countries. Interestingly, perhaps these developments show that there are options for the UK beyond the much-discussed Norwegian and Swiss Brexit models. The Channel Island model perhaps? The EU has long been paranoid that Brexit would lead to the emergence of a large tax haven on its doorstep. But perhaps those claims aren't as fanciful as they seem.
May 03, 2016 Guernsey: beyond reproachAmid the latest OECD scaremongering, another matter that must be worrying the OECD deeply is its inability to kill off tax havens, despite the two decades it has spent trying. In fact, another piece of irony that the Paris-based body's staff seems to have largely missed is that its requirement for ever-greater levels of transparency in offshore financial centers has made these centers more popular, not less. Certainly, this might not be the case in all OFCs, but yearly incorporation statistics and investment data certainly bears out the fact that many are doing very good business, thank you very much. Indeed, Guernsey has said that in certain places, including the United States, investors are actively looking for jurisdictions with good transparency track records. As OECD Secretary-General Angel Gurria observed in 2014, it is now up to the "big islands" to change, not just the little ones.
Jan 18, 2016 Guernsey: channellingNow, BEPS may be changing the international tax landscape irrevocably – whether for better or worse being a matter of intense debate – but the allure of offshore and low-tax financial centers remains as strong as ever. For example, the little island of Guernsey, which at just 78 square kilometers in area is over half the size of Washington DC, is now home to more non-UK entities listed on the London Stock Exchange than any other jurisdiction globally. In fact, the UK Crown Dependencies (Guernsey, Jersey, and the Isle of Man) all play a hugely important role in funneling investment into the capital markets of London, and the wider economy of the UK. One-third of the Chinese companies listed on London's Alternative Investment Market (AIM) were incorporated in Jersey in 2014, up from one-quarter prior to 2008. LSE data also shows that, at the end of December 2014, there were 54 Isle of Man-incorporated companies listed on AIM, putting the island in third place behind Guernsey and Jersey. A recent study by Capital Economics found that Jersey alone channels approximately GBP118bn (USD170bn) of investment into the UK every year. The UK Government, an eager participant in the BEPS project, might therefore want to think very carefully before doing anything that might shut off this supply line of finance.
Feb 26, 2015 Guernsey: means businessOffshore financial centers are often cast as the villains in the seemingly endless debate about tax avoidance. Except that it isn't really a debate anymore, is it? Tax evasion is universally condemned, and rightly so. And it is almost a heresy these days to say that there is nothing wrong with avoiding tax. But perhaps the real rogues in the piece are the "big islands", as OECD Director-General Angel Gurria recently described the large and not-so-transparent countries, which like to sit in judgment over supposedly opaque low-tax jurisdictions. Never mind the Cayman Islands and its famous (or infamous, depending on one's point of view) Ugland House. If you want anonymity, you could do much worse than incorporate a company in Delaware or Nevada. Granted, for the most part, we also don't know who the ultimate beneficiaries of offshore companies are, because such information is not public knowledge. But at least in the most reputable IOFCs, by law, this information is collected and held in a systematic way, and it is there for law enforcement authorities to scrutinize should they need to. This is more than can be said for a number of the holier-than-thou rich countries. The irony in all this is that politicians enter this territory thinking that they can't lose by vilifying tax avoiders and tax havens. Yet, often, it isn't the safe, high moral ground they think it is, as the UK's Labour Party has found to its cost. In fact, the tactic seems to have backfired spectacularly amid allegations that some of Labour's major donors have indulged in tax avoidance. Even the Miliband family themselves are under the spotlight. Depressingly predictable stuff. Meanwhile, the IOFCs have quietly got on with business, and it could be argued that some of them are now indispensable components of the world financial machine, directing investment between the major onshore economies, which in turn support taxable economic activity and jobs. (Read the 2013 Capital Economics report about Jersey's contribution to the UK economy if you're skeptical.) After another successful year for its finance industry in 2014, low-tax Jersey is now home to the largest number of non-UK companies listed on the FTSE 100 index. However, across all three of the LSE's markets, low-tax Guernsey has more non-UK entities listed than any other jurisdiction globally. It's been more than 15 years since the OECD turned its ire on the world of offshore, but pockets of it seem stronger than ever, which stands as a testament to the willingness of IOFCs to adapt to new political and economic realities. In fact, there were five percent more offshore companies in the world in 2014 than on the eve of the financial crisis. Offshore is dead; long live offshore!
Oct 16, 2014 Guernsey: innovatesStaying on the small country theme, Antigua and Barbuda is an example of how relatively impoverished territories with few natural resources can punch well above their weight with ambitious ideas, effective legislation and sensible tax policies. Guernsey is another example. It might have inexplicably plummeted, along with other IOFCs, down the league table of financial centres compiled biannually by Z/Yen. But the news pages of this publication have been replete with stories recently about a number of notable Guernsey firsts. A significant one was the migration of Investec Asset Management's USD1.2bn fund from Ireland to Guernsey, a huge endorsement of the flexible way in which Guernsey has approached a new EU law regulating investment funds, the Alternative Investment Fund Managers Directive. Other recent developments have included the registration of the first financial services firm on Guernsey's innovative image rights register; the registration of the recently-launched Guernsey aircraft registry's first wide-bodied jet; the migration of the first ever foreign foundation company to Guernsey; and the recent introduction of limited liability partnerships. It is also worth mentioning here that the Isle of Man, a fellow Crown Dependency, announced a couple of weeks ago that it has achieved 30 consecutive years of economic growth. How many other countries, I wonder, could boast of the same statistic? Certainly none of the G7 could, and it seems highly doubtful that any of the OECD members could either. What's more, the Isle of Man cannot be considered "dirty," because it is routinely placed in the top tier of jurisdictions for transparency. That's got to be really galling to the Gurrias, Šemetas and Levins of this world!
Jun 19, 2014 Guernsey: cautiousOne of the more curious international initiatives taking place at the moment is the G8-inspired push for beneficial ownership disclosure regimes. Guernsey is just one of the "low-tax" jurisdictions which is expressing caution over what it sees as a Gadarene rush towards a dangerous free-for-all in which basic principles of privacy might be compromised. In fact the Loch Erne G8 summit, now just a year ago, failed to reach agreement on public registers of beneficial ownership, although you would hardly know it from the spin put on the final communique by the British. The actual words used were: "Beneficial ownership information on companies should be accessible onshore to law enforcement, tax administrations and other relevant authorities, including, as appropriate, financial intelligence units." Every G8 country has put its own interpretation on these words, but the UK, no doubt egged on by the Treasury, has laid into its "dependent territories," demanding immediate action on the creation of beneficial ownership registers, and making sure that the goal was incorporated into the Queen's Speech last week, which forms the Government's legislative agenda for the next year. The underlying UK agenda is of course mostly to do with taxation, although the given reason for tightening up on transparency is always the anti-terrorist-financing mantra, which permits all manner of anti-libertarian initiatives. Guernsey's point however is that there should be a level playing field, and it seems to be a very good point, given that the chances of a US beneficial ownership register are fairly close to zero. In the US, unlike most other G8 members, there is no federal company law â€“ companies are formed at state level. One of the most popular locations is Delaware, and a high proportion of US companies are registered there. Legislation passed earlier in the month by the Delaware House of Representatives, in professed response to the G8s initiative, establishes a daisy chain of people that need to be consulted, one after another, in order to find the person at a given limited liability company or limited partnership who has charge of information about the entityâ€™s legal owners. These may be yet other companies, or even nominees. So there has actually been no progress whatsoever towards a transparent beneficial ownership regime. We may also note that the G8 is now reduced to a G7 by the exclusion of Russia, which may possibly not have too much transparency in mind. Mr Cameron must have known that his initiative was doomed to failure, although he hoped no doubt that the media hoopla might panic such as the Cayman Islands and Guernsey into compliance. It looks as if he is going to be disappointed.
Nov 14, 2013 Guernsey: being transparentOctober 25: Guernsey and Jersey have both signed inter-governmental agreements with the UK to improve the automatic exchange of tax information between the jurisdictions.
Apr 11, 2013 Guernsey: in the moneyThe GCC is not itself exactly "offshore," whatever that term means, but some parts of it can definitely be called low-tax, particularly Dubai (part of the United Arab Emirates) and Qatar, and some GCC countries are developing close ties with classic "offshore" jurisdictions such as the Channel Islands, the BVI and Hong Kong. Last week saw a Double Tax Agreement signed between Guernsey and Qatar, which in a way is quite remarkable, and testifies to the amount of business that is flowing between such pairings. A lot of it is in support of FDI, indeed (a very high proportion of the world's FDI flows through "offshore" jurisdictions, such as Mauritius to India, Cyprus to Russia and Hong Kong to the PRC), while in the opposite direction Guernsey's fund regime is attractive to countries such as Qatar which have external investment programs on a massive scale and certainly don't want to put their money directly into high-tax and over-regulated places like London or New York. Guernsey, which has its own stock exchange, is also seen as a good location for special purpose vehicles and property holding companies seeking listing on such bourses as the Alternative Investment Market in London. These financial channels are almost wholly B2B; there is no need and no desire to market such securities to the general public, which would run straight into a forest of regulation. A reputable SPV in Jersey or Guernsey can be sold on the telephone to qualified specialist investors in a matter of hours, although the paperwork is daunting. This is why a small number of highly expert law firms has rapidly grown up to dominate the offshore financing sector, with offices in the BVI, Jersey and Dubai (to pick one example). Although such structures are highly tax-efficient, they are not the intended target of the OECD's BEPS initiative, and they are not in the cross-hairs of crusading politicians such as David Cameron, or Australia's Assistant Treasurer David Bradbury. Actually, the intricate financing channels running between "onshore" and "offshore" countries are vital to trade and international banking, and all finance ministers know this perfectly well; once the current anti-MNC hysteria has died down, attention will shift elsewhere.
Feb 14, 2013 Guernsey: huddles upA couple of weeks back I was suggesting rather facetiously that rich specks of rock in the Caribbean ought to merge their governments, and, lo and behold, here are two specks of rock in the English Channel doing just that. Jersey and Guernsey are making moves towards sharing certain aspects of their administration. I'm not claiming any credit, and I don't even know how many readers we have on the islands; it's just an idea whose time has come. Why would you have two prisons, for instance, with two sets of correction officers? Two tax authorities, when they have identical corporate taxation systems? Two statistical offices? Two telecommunications ministries just about equally far behind the times? Something else I can't understand is why there can't be a market in countries, or at least in their administration. I see why the Greeks wouldn't want to hire Goldman Sachs to put a couple of hundred islands on the market (although that's exactly what they ought to do), but why wouldn't some islands in Melanesia or the Caribbean want to invite bids to take over and run their pension systems? Fidelity would offer however many billions for a 20-year contract, and the voters (who would share out the money) would have the say-so, just like shareholders. Then what about armies? There have always been mercenaries, but the idea has been somewhat buried by nation-hood. They don't have armies in Jersey or Guernsey; it is contracted out to the British government, which actually proves my point very neatly. Instead of getting constantly smaller, perhaps the Ministry of Defence should start recruiting again and offer its services to some of those African countries which constantly fail to shoulder their UN responsibilities, turning up weeks late and with half the required number of soldiers to join the latest peacekeeping force.
Jan 17, 2013 Guernsey: a better mousetrapFoundation is such a good, solid word; it gets used for charitable bodies, apart from being underneath buildings and having logical structures erected on it. The late and much lamented Isaac Asimov used it for the body which would guard the wellbeing of the human race. But in the world of tax, it is nothing so grand, just another contraption for distancing people from their wealth, or, rather, distancing the tax inspector from their wealth. So it is not surprising that Guernsey, which is good at this game, should add foundations to the list of its better fiscal mousetraps, alongside trusts. Guernsey is trying hard at present to fight back against adverse circumstances, including the European debt crisis, the tide of EU anti-business and anti-offshore regulation, with an uncaring and even actively hostile parent in Whitehall. It is busy opening offices (sales outlets) in places like Dubai and Shanghai. I bet it wishes it could be lifted out of the English Channel and dumped down in the South China Sea where the Japanese could fight over it with Beijing. It would be worth a lot more than the Spratlys, and the climate would be better, as well.
Dec 20, 2012 Guernsey: showing some spineFull marks to Channel Islands Jersey and Guernsey for standing up to the UK's bullying over FATCA, and by the same token, a black mark to the UK. The UK Treasury regards the UK's offshore dependencies (Jersey, Guernsey and the Isle of Man) as so many little puppy dogs to be ordered around at its convenience, despite frequent reports showing that they provide tens of billions of pounds' worth of benefit to the mainland every year through tax-efficient investment which would otherwise flow to Hong Kong or elsewhere in the world. The UK shows no gratitude or recognition whatsoever, on the contrary, punishing the islands whenever it can. Recent outrages include changes to the Isle of Man's VAT settlement which worsen the IOM's finances by at least GBP100m a year, standing by with arms folded while the EU's Code of Conduct Committee (Star Chamber) forced changes to the islands' income tax regime, and the use of British courts to abolish low-value consignment relief (which actually forms part of settled EU directives) for the islands, but not for anyone else, which chopped hundreds of jobs away from these tiny economies, at the behest of UK retailers. I ask myself, why don't they quit, and demand full independence from the UK and the EU? Especially now that the rolling tide of financial EU directives is impinging more and more every day on their economies. The AIMFD is just one example of the wave of nannying, obstructive and unnecessary legislation which will harm the islands for decades to come. The dependencies have very large cash balances saved up from the good years, even if they are running temporary minor deficits, and can well afford to stand on their own feet.
Nov 15, 2012 Guernsey: will go it aloneGosh, it's difficult to find anything nice to say about governments at the moment. I suppose the poor things are desperate for money and think they have no choice other than to brutalize their citizens in order to extract the maximum amount of tax. They are caught in a trap of their own devising, between the Scylla of burgeoning public spending and the Charybdis of rebellious taxpayers. What a relief then to turn to the offshore jurisdictions, where the authorities have massive cash balances and hesitate mightily before asking for even one penny more from their citizens. They have chosen to live on their wits, rather than grinding down the populace in order to finance ornate bureaucracies. One such is Guernsey, which like many other low-tax jurisdictions has got to cope with a series of oppressive EU initiatives designed to squeeze the life out of 'offshore' under the pretence of creating a level playing field on which we can all be poor together. In particular, this week, Guernsey has said it will maintain a lightly regulated regime for alternative investment funds alongside the 'official' EU regime under the AIFMD. It's a matter of survival for Guernsey, which does however have to be careful not to drive the EU into outright opposition, maybe forcing it to quit the UK's protective 'dependent territory' regime and open itself to all the unfriendly winds of international competition. Not that the EU's furry pussy-cat funds regime could compete against anything; but there are a lot of investors in Europe (for now) and a lot of lawyers in Brussels (for ever).