Tax structures may have to change

Stephen Timms from UK Treasury met with the islands' chief ministers

Jersey and Guernsey may have to change their business tax structures if they want to meet European Union standards.

Both islands have a zero-ten system that means many businesses pay nothing in corporation tax.

The chief ministers of both islands met with the UK treasury's financial secretary to discuss the mood of the EU in the current economic climate.

Concern was raised that the zero-ten schemes are not fully compliant with the EU Code of Conduct on business tax.

Jersey and Guernsey introduced the system so they could remain competitive as offshore finance centres.

But after meeting with Stephen Timms, from the UK Treasury, they learnt they may not meet the tax standards the EU aims for.

Neither island is a member of the EU, but Jersey's Chief Minister Senator Terry Le Sueur said he was fully committed to making sure Jersey's tax structures met global standards.

Mr Le Sueur and Guernsey's Chief Minister Deputy Lyndon Trott said they would work closely together to discuss the issue and review their tax systems.