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Guernsey: E-Commerce

Introduction

Guernsey encourages information technology operations, in line with its general strategy of increasing the sophistication and capital intensity of business operations on a small island where resources are already very strained. The Information Services Department of the States of Guernsey is actively planning support measures for the development of e-commerce activity.

The government's vision statement includes the paragraph: "The possibilities offered by e-commerce have been recognised by the Island's government, which is putting all its energy into the development of e-Guernsey as a world class centre of excellence in this field."

In January, 2001, Guernsey's Board of Industry announced the appointment of Kevin Green as the island's e-Business Director. Mr Green previously undertook brand and business development client assignments for international companies through his consultancy company, Metasis International, and had recently been working on a series of successful e-commerce projects in the B2B, B2C and C2C arenas.

The legislative framework to support e-commerce was introduced in March 2001 with the enactment of the Electronic Transactions (Guernsey) Law 2000 and the establishment of an intellectual property law.

During March 2001, Ernst and Young in the Channel Islands asked 215 organisations in Jersey and Guernsey to complete a written questionnaire relating to information security in the electronic economy. The findings of the survey, entitled Channel Islands Information Security Survey 2001, revealed that security and privacy concerns were the biggest inhibitor to the expansion of e-commerce in the islands, closely followed by the lack of facilities.

Many of the organisations surveyed did not have an e-business strategy, although they did use the Internet. Whilst 22% of those surveyed were using electronic transaction capabilities, a further 38% said they were considering using them, so security issues are becoming an increasingly important concern for companies in the Channel Islands. Indeed 77% of the respondents to the survey cited security and privacy concerns as the major stumbling block, due to lack of employee awareness, lack of confidence in detecting hacking attacks, or previous experience of business systems failures.

However, a hefty 37% of the respondents said that they considered the lack of resources, skills and expertise within the Channel Islands as the second major barrier, the three principal areas identified as needing improvement being the cost of telecoms services, broadband services and infrastructure, particularly links to the UK and Europe.

Other concerns identified by the survey were lack of confidence in business partners or third parties and lack of confidence in IT infrastructure to support it. Many of the Channel Islands' e-commerce enterprises outsource a variety of IT functions - the main ones being ISP web-hosting and IT infrastructure - for reasons of expertise, cost efficiency and maximum service levels. However, a number of respondents indicated that they were unhappy with at least one key area of their outsourcing deal.

In September, 2001, the governments of Guernsey and Jersey announced a scheme under which e-commerce business needing to re-locate from island to island as part of a disaster recovery situation would be spared any change in their tax status.

The income tax authorities of both Islands agreed that, if in need of disaster recovery, 'any temporary relocation to the other Island will not cause any tax burdens due to that relocation,' which effectively means that a company which continues to make profit whilst based in the other Island will not be subject to taxation from that Island's tax authority.

Jersey's Comptroller of Income Tax, Malcolm Campbell explained: 'Facing a disaster causes any company a tremendous upheaval and we felt that we did not want to add to this administrative problem by placing a subsequent financial burden on businesses. Additionally, the agreement provides yet another string to our bow in attracting new e-commerce business to the Island.'

The agreement is detailed in each Island's Code of Practice entitled the 'Concession and Practice Booklet.' Although it extends to any type of business, it is particularly important in respect of e-commerce businesses due to the fact that if it becomes necessary to establish a business recovery location in the other Island, not only will they benefit from the no tax rule but they will also be able to make use of the bandwidth running through the inter-Island fibre optic cables.

In July, 2002, Guernsey' Board of Industry produced a case-study book, telling the stories of some of the Island's e-business successes. Deputy Kevin Prevel, vice president of the Board of Industry explained that:

'Contrary to what the sceptics will have us believe, e-business is most certainly not finished. Guernsey must continue to do everything it can to support its pioneering of e-business, and to attract further innovative hi-tech businesses to the island for the long-term prosperity of the Bailiwick.'

See below for specific information on e-commerce in Guernsey, or go to Offshore-e-com.com for an extensive analysis of the commercial possibilities and the legal background.

 

 

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