The study was carried out by a panel consisting of a former States member, an economist and an independent economic consultancy group.

The report concluded the "zero-ten" tax model proposed by the Policy Council was the only viable option.

A "zero-ten" system means some companies would pay 0% tax, while others would be taxed at 10%.

Predicted deficit

The panel, which ruled out a "zero-twenty" alternative as "too risky", said retaining the finance industry in the island was vital.

The Isle of Man announced in its budget in February that it would introduce the "zero-ten" system.

It is one of Guernsey's main rivals in the finance industry and Jersey has also decided to adopt a similar arrangement.

The independent report has also estimated the States could suffer a loss of income between �50m and �80m, depending on what measures were introduced, and how islanders responded to them.

The island's government has been preparing for a predicted �48m budget deficit when corporation tax is abolished in 2008.