GUERNSEY’S ministers are standing by the controversial tax rules that Jersey dropped last year to appease the EU, according to a leaked email.

Although politicians in Guernsey have made no public statements about whether or not they will keep the ‘deemed distribution’ system, it appears that they want to hold on to it.

Jersey’s version of ‘deemed distribution’ allowed the owners of Jersey companies who live outside of the Island to pay no tax on profits in Jersey, whereas shareholders of Island companies who live here do have to pay tax.

The difference in treatment of shareholders depending on where they live was the focus of the pressure from the EU last year, so Jersey’s politicians dropped the system to keep Europe happy.

But Guernsey has a slightly different version of the zero-ten system, and according to the leaked email, the island’s politicians are planning to stick with it. With their formal assessment by EU inspectors due to start next week, officials in Guernsey are said to be ‘quite confident’ that they will pass the test.

Full story in Monday’s JEP