In Guernsey, there is no withholding tax for dividends, nor capital gains tax or inheritance tax; there is no income tax levied on 'non-Guernsey' income generated from trusts whose beneficiaries include no Guernsey residents. Excluding some regulated financial services business, the standard rate of corporate income tax is zero.
In addition, it is our understanding that while the initial, upfront costs of doing business in Caribbean jurisdictions may be less than using Guernsey, in fact, over the longer term, the expense is likely to be broadly comparable.
Q: Does Guernsey's depositor compensation scheme allow investors from China to open bank accounts there? What happens if they have more than 50,000 pounds to invest?
A: Banking services provided from Guernsey would be most often to wealthy clients outside China. Lending may be part of the portfolio of services that could be provided to these clients, and both deposit and lending services may be complementary to a wider wealth management plan.
In the event of the failure of a Guernsey Bank, the DCS provides compensation of up to £50,000 per qualifying deposit in respect of that bank and aims to pay compensation within three months of a bank failure.
Q: As you might know, Chinese businesses are having difficulties acquiring loans from their own banks, which are compelling a number of them to reach out abroad looking for loans. How do Guernsey banks view working with Chinese businesses and individuals?
A: We are keen to encourage a number of Chinese banks to consider setting up in the island. The rationale for a Chinese bank setting up in Guernsey would be to assist the rapidly growing number of their wealthy expatriate clients and institutions with their international banking requirements.
In fact, we have established good relations with several Chinese banks on recent visits to China. Although some large Chinese banks have set up overseas branches, the majority of them are still concentrated on commercial banking business rather than private banking business, whereas many Chinese clients need a channel for overseas investment.
Guernsey currently has more than 150 fiduciary firms providing wealth management services, employing nearly 2,500 people.
Q: I am aware that the island is ideally situated in Europe in that it can do business in many different European languages. But can the island do business with Chinese clients who are not able to write and speak in a European language? Which firms are able to do this?
A: We have a small number of Mandarin speakers working within the finance industry locally, but there are a number of Guernsey firms that have registered offices in China that can use this connection to provide a service to those clients who cannot write or speak in a European language.
In addition, fund administrator International Administration Group (IAG) has established an office in Hong Kong and is in the process of opening another in Singapore. IAG has also established a partnership with Exceedor in Shanghai which allows it to provide onshore renminbi (RMB) denominated private equity fund administration services in China.
Q: Have you seen an increase in Asian investors and business owners on the island, especially ones from mainland China? If so, do you expect this trend to continue and why?
A: According to recent data from the Guernsey Financial Services Commission (GFSC), more than 3% of all new fiduciary business in Guernsey has come from mainland China. Although Asia, including China, still only accounts for a little over 6% of all fiduciary business in the island, the increase from those regions for the year ending June 2012 was very encouraging as the same GFSC data showed that the share of new work coming to Guernsey from Asia (excluding China) was up from 5.54% of all existing business to 6.72% of new business?
We expect the amount of business we do with China to continue increasing in future as the firms already on the ground make their presence more visible and a greater number of Guernsey firms look to establish their own presence in Asia, recognising that the region is home of much of the world's emerging wealth.
