Introduction
With a population of 65,573 over an area of 78 square kilometers, Guernsey (including Alderney, Herm, Sark and some other small islands) lies in the Gulf of St Malo, west of France and south of Weymouth, England. Guernsey itself contains two main geographical regions, the Haut Pas, a high southern plateau, and the Bas Pas, a low-lying and sandy northern region. In general terms, the Haut Pas is the more rural of the two, and the Bas Pas is more residential and industrialized.
It is inhabited by Britons Norman-French and other European who predominantly speak English and French.
Business Environment
The Island combines a unique mix of simplicity and sophistication where a leading 21st century global finance industry sits easily alongside crab pots, traditional beach kiosks and roadside vegetable stalls.
There are a wealth of support businesses providing all the infrastructure anyone might need to get their businesses off the ground, from all types of telecoms services, to office supplies and recruitment agencies.
Economic Environment
Financial services – banking, fund management, insurance – account for about 23% of employment and about 55% of total income in this tiny, prosperous Channel Island economy. Tourism, manufacturing, and horticulture, mainly tomatoes and cut flowers, have been declining. Financial services, construction, retail, and the public sector have been growing. Light tax and death duties make Guernsey a popular tax haven. The evolving economic integration of the EU nations is changing the environment under which Guernsey operates.
Taxation
In Guernsey there is no general capital gains tax, inheritance tax or estate duty, purchase or sales tax, VAT or capital transfer tax. The main taxes are income tax at one rate of 20% and the Dwellings Profit Tax; and social security contributions are payable. Property owners and occupiers may be liable for small parish taxes.
In July, 2006, Guernsey’s parliament passed a set of economic and taxation changes that includes the zero rate of corporate tax and the capping of personal tax at GBP250,000. This new tax system went into force on January 1, 2008.
The package of measures includes:
• A zero rate of income tax on company profits, except for specific banking activities which will be taxed at 10%;
• Guernsey residents continue to pay tax at 20% on assessable income;
• Personal tax capped at GBP250,000 on non-Guernsey income and investment income;
• Taxation of Guernsey-resident shareholders on distributed company profits only; and
• Wealth taxes such as inheritance tax and capital gains tax will not be introduced
Banking
Sterling is the currency of Guernsey, which has its own notes and coins. UK and Jersey currency can also be used within the islands but Channel Island sterling will not be accepted in the UK apart from at banks which will exchange notes
Guernsey’s mature banking sector is central to its reputation as a leading international finance centre.
International banking groups with head offices in Switzerland, Europe, USA, the United Kingdom and a number of other international locations have established subsidiaries on the Island. Some of the most highly respected names in international finance have chosen to place their operations in Guernsey alongside independent, boutique providers. The sector provides products ranging from retail banking and savings through international wealth management to institutional business and specialist lending. Importantly it services the other financial services sectors (trust, insurance, investment funds) on the Island.
Offshore Banking
Guernsey is one of the most reputable offshore banking centers in the world due to its effectively regulated banking sector and wide range of services it provides.
Offshore banking sector in Guernsey is licensed, regulated and supervised by Guernsey Financial Services Commission (GFSC) according to the Banking Supervision Law of 1994. GFSC pay special attention to the detection of unlawful transactions and affairs
Guernsey offshore banking sector together with other financial activities is subject to strict money laundering controls according to Proceeds of Crime of Bailiwick of Guernsey Regulations of 2002. Offshore banking institutions are required to report suspicious transactions associated with terrorism financing and money laundering to the Guernsey Financial Intelligence Service.
