P&R says more than 50% of non-finance businesses won't need to register for GST

Tuesday, 12 September 2023

The Policy & Resources Committee has said smaller businesses in Guernsey will be protected from administration costs by not having to register for GST.

It has modelled its plans based on a GST registration threshold of £300,000 a year for business turnover. This high threshold - the UK's VAT equivalent is £85,000 - means it is estimated more than 50% of incorporated businesses outside of the finance sector would not be required to register.

The impact of GST on small businesses is one of a wide range of subjects covered in a Frequently Asked Questions published by the Committee at www.ourfuture.gg/public-finances. Other areas covered include the need to invest in infrastructure, the island's ageing demographic, the range of options considered to make public finances sustainable, and corporate tax.

Ahead of October's States debate on the Funding & Investment Plan and Capital Portfolio, where the Assembly will consider how public services and infrastructure investments are funded, and which infrastructure projects should go ahead, the Committee wants to ensure islanders have every opportunity to review key material to inform debate. The website has been updated with bitesize information, graphics, FAQs and a video of the Committee's presentation to the media about its plans.

Deputy Mark Helyar, Vice-President of the Policy & Resources Committee, said:

'We have published a range of material on ourfuture.gg about the current state of public finances and our plans. I appreciate that it is unrealistic to expect many members of the community to be able to find the time to read a 150-plus page policy letter, so the website content and Frequently Asked Questions are designed to try and give people the core information they need.

'As an example, one of the claims we hear regularly is that GST will damage small businesses. It's not true, but it's a common misunderstanding. In most similar systems, very small businesses are not required to register for Goods and Services Tax. In the UK the threshold for VAT registration (a GST equivalent) is a business turnover of £85,000 but the Committee's plans are modelled on £300,000. At this level it is estimated that more than 50% of incorporated businesses outside of the finance sector would not be required to register. This high registration threshold helps protect smaller businesses from the cost of administration.

'And for those businesses that would be required to collect GST and remit it to the States, because this kind of tax is very common around the world modern accounting and till systems have modules to help businesses manage this.

'The Committee would encourage as many people as possible to review the content on ourfuture.gg, including our sustainable option which will result in lower tax for people on low incomes while also protecting the "squeezed middle", before taking a position on the proposals.'