On Monday 3 October, the 2017 Budget report was released. Deputy St Pier said “Preparing the 2017 Budget in the context of the revenue shortfalls experienced in 2015 and 2016 has been challenging.
On Monday 3 October, the 2017 Budget report was released. Deputy St Pier said “Preparing the 2017 Budget in the context of the revenue shortfalls experienced in 2015 and 2016 has been challenging. It is therefore particularly pleasing that it has been possible to produce not only a balanced budget, but one which is also simultaneously responsible, fair, progressive and realistic”.
The proposed rules will be debated by the States of Guernsey on 1 November 2016.
The Island’s financial position
The overall financial position of the Island at the end of 2015-16, although still in deficit, is healthier than expected; the closing deficit was £5.4 million, as opposed to the predicted £10+ million deficit. This was achieved through a combination of reduced expenditure in certain areas and increased receipts of document duty from house sales during the year. There are indications that certain measures and controls have been introduced around government expenditure, which will be seen by many as a positive development.
Tax for Guernsey businesses
No changes have been proposed to Guernsey’s corporate tax regime, which has seen a number of changes introduced in previous years. The stability will be welcomed by businesses operating in the Island, and those who may be considering expanding their businesses or indeed establishing an operation in Guernsey for the first time.
The Policy and Resources Committee will continue “to monitor the appropriateness of the corporate tax regime” and to “report back to the States should it consider any changes are necessary”. In the current environment, it is smart to keep the business tax regime stable and consistent, yet being alert to changes that might be required in the future in order to adhere to international standards. It is worth noting that any such international developments would apply equally to Guernsey’s competitors.
Personal income tax allowances
The proposed changes to the personal income tax allowances will impact individuals in Guernsey who are solely or principally resident for the Year of Charge 2017 onwards and are detailed as follows:
Other proposed changes
The usual duty increases are there, which do directly impact the cost of living in Guernsey, and go a way towards counteracting the increased personal tax allowances.
Full details of the proposed changes can be found on the States of Guernsey website
KPMG in the Channel Islands can provide you with further insight into how the proposed changes can impact individuals and businesses in Guernsey.