Global Daily Tax News, Guernsey Fleshing Out Tax Reform Options, (May 14, 2026)

Guernsey's Policy and Resources Committee has provided another update on the ongoing development of tax reform options that will be decided upon by the territory's lawmakers this summer.

The main proposal under consideration involves the introduction of a goods and services tax alongside a number of changes to income tax and social security tax rules (the "GST-plus" reform).

An alternative tax reform, involving changes to corporate income tax, is also being developed concurrently, should lawmakers opt not to introduce a GST.

Under GST-plus, GST would be introduced at a rate of five percent. The States recently agreed that the GST would be applied broadly, including to food. Alongside GST-plus, it is proposed that the following changes would be implemented:

• Cutting the standard rate of personal income tax to 15 percent, with a higher rate of 20 percent applied to income currently above GBP32,400 a year. This threshold will be higher at the time of implementation, as it will be increased in line with inflation;

• Introducing a social security allowance (currently GBP15,200 a year) to match the personal tax allowance;

• Increasing pensions and benefits to compensate for the GST's impact on prices;

• Introducing a new annual Essential Costs Relief Payment to support those low-income households who do not, or cannot, claim income support (provisionally set at GBP520 a year for a single adult or GBP860 a year for a couple);

• Introducing new legal protections that would require the States to increase all allowances, thresholds, and benefits if it ever wishes to increase the standard rate of GST; and

• Considering a new statutory requirement for a 'super majority' (e.g. two-thirds) in the States of Deliberation to agree any increases in the rate of GST.

In its new update, the Committee has said it has received a report commissioned from the Tax Review Sub-Committee, made up of two members of the main committee and three independent international tax policy experts. The sub-committee was tasked with considering alternative options, focused on corporation tax.

Its report recommends two corporate tax measures but also the adoption of the GST-plus package.

Namely, it has recommended:

• Applying the intermediate (10 percent) company rate to the entire corporate entity, raising up to GBP0.5m; and

• Extending the intermediate (10 percent) company rate to apply to certain registered prescribed businesses, such as accountants, legal firms, and other professional services, raising a further GBP2.5m.

The GBP3m in revenue expected from these measures pales in comparison to the revenues expected from GST-plus – GBP50m – and, therefore, the sub-committee has recommended that, even if the corporate tax measures were implemented, lawmakers should also agree the implementation of the GST-plus reforms.

On the report's release, Lindsay de Sausmarez, President of the Policy and Resources Committee, said the subcommittee's report and recommendations "are based on a narrower range of options than the Committee is exploring" and will be taken into "careful consideration when developing our final proposals."

The Policy and Resources Committee has also reported on work to identify areas to reduce government spending, noting the States has already committed, through a resolution in the Government Work Plan, to target efficiencies that by 2029 should save GBP17m annually. However, it said more exploratory work is ongoing to identify potential public services reductions that would be palatable for islanders generally opposed to such cuts.

Finally, it said reform of Guernsey's transportation tax rules is being considered, stating: "Options being considered include a meaningful reduction in fuel duty rebalanced by fairer annualised charges on vehicle ownership to bring electric vehicles into scope, and progressing the States' resolution to introduce a surcharge on first registration duty for very high value personal vehicles."

The Policy and Resources Committee has announced it will publish its final proposals in a policy letter in time for a States debate in July.