The man who has been pushing for territorial tax reform has accepted that it can’t happen just yet but he still thinks it could change in the future.
Deputy Charles Parkinson is a Member of the Policy & Resources Committee, and is leading the Tax Review Sub-committee that was tasked with looking at alternatives to the planned introduction of GST+.
Yesterday, it was confirmed that the Sub-committee has decided that territorial tax reform won’t be included in its recommendations – which are due to be published next month.
The Sub-committee said it had made this decision “having listened to the views of the independent experts and having carefully undertaken a risk-reward analysis and considered feedback from the public consultation”.
Deputy Parkinson hinted that he will continue to push for territorial tax reform in the future.
“I continue to believe that corporate tax reform can play a significant role in what we ultimately recommend to the States in the summer,” he said. “There is an expectation from the public that businesses pay their fair share of tax, but this must be in a way that doesn’t affect our attractiveness as a good place to do business.
“To that end, the Sub-committee has agreed that territorial tax will not form part of our recommendations to the rest of P&R. While on a personal level I continue to believe in its merits, I accept the need for the Sub-committee to narrow the options it’s considering and now is not the right time. However, we must continue to monitor and evolve the corporate tax system in line with international developments in the years ahead.
“Once we’ve shared our findings with the rest of P&R in mid-April, it’s important that we will have the opportunity to share them with industry and the public. Transparency of this work is something that I have championed from the start, and this will be the right time to show our working.”
The Sub-committee had told P&R of its findings last week.
P&R also said that it recognises the island will need to continue to monitor and evolve the corporate tax system in line with international developments over the coming years, but the planned tax reforms including the proposed introduction of GST+ is the immediate priority.
P&R said that the Sub-committee’s terms of reference specifically include a direction to explore what our tax system might look like in the longer term, and that work will start soon.
That will include “the evolving international corporate tax environment, but also other evolutions such as AI and ongoing changing demographic trends”.