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Newsletter | Articles The Islands are Changing their Competitive Position with New Tax Rules The way Britain’s Crown Dependencies are tackling the Zero/Ten tax black hole are significantly different. Although the Islands (Isle of Man, Guernsey and Jersey) have, or are about to, adopt a zero rate of corporate tax, except for some banking services which will pay 10 per cent, there are several technical differences. In the Isle of Man, the 10 per cent only applies to income derived from banking. Non-banking business, including insurance, custody, trust and corporate services are zero rated. Here, there was no requirement to address the loss of corporate taxation because the Island collects sufficient indirect taxation through being part of the UK’s VAT regime. Guernsey and Jersey, however, have had to address the void left by the general reduction in corporate taxation. Guernsey’s new tax regime for corporates will come into force in January 2008, when the general level of tax on corporates will be zero per cent. This excludes banks on their regulated business activities, on which their profits will be charged at 10 per cent, and companies regulated by the Guernsey Office of Utility Regulation, where they will be charged 20 per cent on their profits. In Jersey the zero/ten per cent tax regime will commence on June 3, 2008, for new entities formed after that date and January 1, 2009, for all other entities. Jersey currently taxes Corporate Services Providers, but after 2009 it will not. A Goods and Sales Tax of 3 per cent will be introduced in April 2008. The Isle of Man offers the most generous tax cap of £100,000 for individuals, which now includes local source income. Jersey’s tap cap is £250,000 for a couple. For more information contact Stephen Colderwood.