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Guernsey leads way on tax transparency

Guernsey is at the forefront of standards on tax transparency and information exchange, according to Tony Mancini, Head of Tax at KPMG in Guernsey.

Interviewed by Caroline Hyde on Bloomberg’s Countdown show, Mancini was questioned on how Guernsey was responding to calls for the Crown Dependencies of Guernsey, Jersey and the Isle of Man and other British Overseas Territories to establish public registers of offshore firms.  Mancini responded by pointing out that the steps already taken by Guernsey put it ahead of others, including the UK.

“If you are a UK resident or anywhere [else] for that matter and you want to run a company in Guernsey, you have to get a regulated financial services provider to run that company for you. Those companies, the trust companies or fund administrators, are required to gather information to find out exactly who does own the company, not just the legal owner of the shares in that company, but the ultimate beneficial owner. They have to identify them and keep a record of who they are – now that’s not a matter of public record but it is something that those companies are required to keep,” said  Mancini.

“In terms of knowing who own all the companies and structures that are run in Guernsey, they are known here and if a government has a legitimate reason for finding out who the owner of a structure is in Guernsey, they can do that through the appropriate channels. That is something that many countries, including currently the UK, aren’t able to do.”

Mancini’s comments to Bloomberg have been welcomed by Sinéad Leddy, Head of Technical at Guernsey Finance, the promotional agency for the Island's finance industry.

“Guernsey has captured beneficial ownership information on a corporate registry since 1999 which is shared with foreign authorities in appropriate circumstances. This in itself is far ahead of the information currently captured in some other mainstream financial jurisdictions. The UK is largely alone in asking for this information to be made public and we have pointed to the many dangers and pitfalls of doing so,” says Leddy.

“Further, at the last meeting of the G20 nations, one of the key findings on beneficial ownership was an endorsement of the current Financial Action Task Force (FATF) approach which is to ensure that the true owners of value are known, that this information is readily available and that it can be exchanged between governments without undue difficulty. The IMF currently ranks Guernsey number one for FATF compliance which is a testament to the joined-up commitment at political, regulatory and industry levels here.”

Upon further questioning in his Bloomberg interview,  Mancini reiterated the point that Guernsey had done everything it could in terms of moving towards tax transparency.

“The OECD last year introduced a Common Reporting Standard for automatic exchange of information amongst OECD member states and other territories, and Guernsey, along with Jersey and the Isle of Man, was one of the 51 early adopters of that standard, so we are at the forefront of automatic information exchange and therefore tax transparency on a global scale and we have been doing that for many years now.”

When it was put to Mancini that a Labour win in the upcoming General Election would be the worst result for Guernsey after threats by its leader Ed Miliband that the Crown Dependencies and the British Overseas Territories would be blacklisted if they did not compile public registers of offshore firms, Mancini said the contribution of Guernsey’s funds sector to the economic well-being of the UK should not be underestimated.

“We are a significant contributor of funds into the UK. At KPMG we have recently done some research into the importance of the investment funds sector here in Guernsey and there is actually GBP25 billion of net investment – that’s investment coming from outside the UK into the UK – that is coming through Guernsey investment fund structures, so actually whichever party is in government post-election, they can look to Guernsey for a source of important foreign investment.”

Andrew Whittaker, Managing Director of Ipes in Guernsey, who was interviewed for Bloomberg’s On the Move show by Anna Edwards, made similar points. Whittaker, who was speaking on behalf of the Guernsey International Business Association – the representative body of the financial services industry in Guernsey – said Guernsey’s funds sector played an important part in the UK’s economy and in 2013 was responsible for saving 14 companies and 6,000 jobs because of funds channelled through the Island.

“The Channel Islands are very well regulated and very well placed to aid the City of London in its financial investments and the structures that it uses, so it makes a lot of sense to keep this controlled, to keep this well regulated and to keep the investment coming into the EU and coming into the UK,” said Whittaker.

“We have to remember that a lot of the investment is from around the world and these are not UK companies investing in the UK, they are actually global investors coming into the UK and you have to have a structure and a facility to allow these investors to come in collectively and want to come in collectively. We are using pound sterling and it’s a very attractive proposition to attract investment through the City of London, which generates tax, particularly high-net-worth jobs for the City of London.”

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