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Guernsey:
a financial overview
Guernsey is an independent, well regulated and internationally
accepted jurisdiction with a framework of legislation
and practices that ensure its position in the first division
of offshore financial centres.
Its position as a centre of excellence for the provision
of offshore financial services is evidenced by the wide
range of institutions conducting business on the island
and the quality of the Guernsey professional practices
upon whose expertise they can call.
The Guernsey finance industry dates back to 1922 with
the establishment of captive insurance companies. The
industry has grown since then and is now a significant
player in the banking, investment and fiduciary as well
as insurance business. Products are distributed on a global
basis including to expatriates and high net worth individuals.
The Guernsey advantage
The Channel Islands are self-governing dependencies of
the Crown of England but they are not part of the UK.
Neither are they a part of the European Union (EU).
The island complies with EU directives in the trade of
industrial and agricultural products, but it is not subject
to any directives or regulations, including those dealing
with harmonisation of taxation, financial services, exchange
of information or social policy.
As an offshore jurisdiction, Guernsey is widely recognised
as a well-regulated financial centre with very well-developed
advisory and financial infrastructure.
The finance industry is Guernsey’s major industry,
having grown significantly since the early 1980’s,
contributing over 55 per cent of the islands Gross Domestic
Product.
The banking industry consists of around 60 licensed banks
in the island with deposits of around £70bn. They
represent a range of countries with concentrations of
banks with head offices in the UK and Switzerland. Other
banks are from Bahrain, Bermuda, Canada, Cyprus, France,
Germany, Hong Kong, Ireland, Italy, Netherlands, South
Africa, Spain and the US.
The range of services offered by banks in Guernsey is
quite diverse. Some provide retail banking services, others
target affluent expatriate market, primarily attracting
their deposits.
There are also banks offering private banking services
attracting high net worth individuals who seek a total
wealth management solution to their financial needs.
Banks also support the other financial services business
operating in Guernsey providing custody, foreign exchange
and other banking services to the investment, fund administration,
fiduciary and insurance sectors. There are also a number
of European banks that specialise in providing banking
services to the corporate market.
Taxes
With pressure from the EU and competition from other offshore
centres, 2005 saw Guernsey fighting to keep its position
as a financial centre by designing new tax breaks for
businesses, offering customers new products and marketing
itself to customers worldwide.
Despite these threats, Guernsey has succeeded in the battle
to remain a leader in the offshore world, with new tax
laws to be imposed in January 2008.
Under the new tax regime it is proposed that the statuses
of exempt company and international company will be abolished
with effect from 1 January 2008, after which they are
to be subject to the 0 per cent or 10 per cent rate under
the new policy.
The provisions of Guernsey’s income tax law apply
to the islands of Guernsey, Alderney and Herm. |
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