Anger as dependencies choose withholding tax
The Treasury is unhappy with the decision of three crown dependencies to impose withholding taxes on investors rather than opt for the immediate adoption of EU recommendations.
Gordon Brown in particurlar has fought against the withholding tax option, which is available for a transitional period for some EU states and territories, before they adopt a policy of open exchange of information between tax authorities, set to begin in 2005.
Jersey, Guernsey and the Isle of Man have all chosen to impose withholding taxes on interest earned by non-domiciled account holders, joining Austria, Belgium and Luxembourg who have all secured similar concessions expected to last until 2010.
The FT quoted Dawn Primarolo as saying: ‘I would have preferred them (Jersey, Guernsey and the IoM) to move immediately to automatic information exchange.’