Monday, November 26, 2012
Guernsey plans to expand the scope of its 10% corporate income tax rate, and phase out mortgage interest relief under Finance Minister Gavin St Pier's maiden Budget for 2013.
Under the plans, the 10% corporate income tax rate will be extended to cover the activities of licensed fiduciary businesses, licensed insurers in respect of their domestic business, and licensed insurance intermediaries and managers, effective from January 1, 2013. Presently the 10% rate is levied only on banking institutions and loan companies.
The mortgage interest relief cap will be reduced by GBP50,000 (USD79,800) each year until the concession is phased out entirely by 2021. After a one-year grace period, the current threshold of GBP400,000 will be reduced to GBP350,000 on January 1, 2014.
Tax on property, fuel and alcohol will be hiked in line with inflation, by 3%. Duties on tobacco will be hiked above the inflation rate, by 6%.
According to St Pier, the proposals come ahead of a comprehensive review of the tax regime to commence in 2013. As part of this review, the government will consider amalgamating the personal income tax with social security contributions; a review of the property tax system; and may rein in tax allowances for the island's highest paid.