Guernsey, Channel Islands

Inventory valuation

Inventory is valued at the lower of historical cost or net realisable value. Use of last in first out (LIFO) is not permitted. Generally, there are no material differences between accounts prepared on a normal accounting basis and those prepared on a tax basis.

Capital gains

Capital gains are not subject to tax in Guernsey.

Dividend income

All dividends paid by a standard tax-paying company (0%) are deemed to have been paid from income arising after 31 December 2007 (i.e. after the introduction of the zero/ten tax regime), unless the company elects to have them treated otherwise.

Stock dividends

Stock dividends may be treated as income.

Interest income

Interest received from a Guernsey bank is taxable at 0%.

Interest income received by a standard tax-paying company is taxable at 0%.

Please refer to the Taxes on corporate income section for further information on companies liable to tax at the company intermediate rate (10%). Please also note our comments in the Withholding taxes section.

Royalty income

Royalty income is treated as income for corporate income tax purposes. Any royalty income received by a standard-tax paying company is taxable at 0%.

Foreign income

Resident corporations are liable to tax on their worldwide income. Income tax is levied on foreign branch income when earned, and on investment income from foreign dividends, interest, rents, and royalties. Double taxation is mitigated either through unilateral relief (by giving credit for foreign taxation of up to three-quarters of the effective Guernsey rate) or by treaty relief.