The European Council of Finance Ministers in December approved the zero-10 regimes of Jersey and the Isle of Man, both of which had revised their personal tax codes in order to remove so-called “deemed distribution” provisions in order to meet concerns raised by the Code Group when it reviewed their zero-10 schemes, beginning in 2010.
In February, the Code Group also discussed the matter of Guernsey's zero-10 regime, at a meeting at which States of Guernsey officials argued that it might be approved as-is, without the need for changes to the island’s personal tax system, as was done in the case of Jersey and the Isle of Man.
Deemed distribution rules are anti-avoidance provisions under which, in certain circumstances, island residents are deemed to have received a dividend from a profit-making island company in which they own shares. Such “distributions” are then taxed as income.
Guernsey was excluded from the Code Group’s initial review of zero-10 schemes after it committed to undertake a formal reassessment of its corporation tax regime, with a view towards possibly replacing it with something else.
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