The Channel Islands are situated off the Cherbourg Peninsula in the English Channel. The Islands consist of the Bailiwick of Jersey and the Bailiwick of Guernsey. The latter includes all the Islands except Jersey. Best known of the smaller Islands is Alderney, which has its own company law but is linked for tax purposes with Guernsey, and Sark which has no company law and is fiscally independent.

Jersey is approximately 45 square miles (116 square kilometres) in size and has a population of some 86,000 residents. Guernsey is approximately 24 square miles (62 square kilometres) in size and has a population of some 58,000 residents. The populations of Alderney and Sark are about 2,000 and 500 respectively.

The Channel Islands have achieved substantial growth over the last thirty years and have now become one of the world's leading international financial centres. Areas of activity encompass the entire range of international banking, investment and insurance business, as well as professional services, such as legal and accounting, to cater for the needs of the finance sector.

Both Jersey and Guernsey have been selective in the business which they have allowed to establish. Being concerned to preserve the reputation of the Islands the authorities rely a great deal on vetting the owners and promoters of Channel Island companies. Particular care is exercised in permitting the establishment of "public" vehicles and specific controls exist over deposit-taking institutions, collective investment schemes and insurance companies.

None of the controls referred to above will seriously inconvenience a good quality incoming concern that is properly advised and which can demonstrate that its presence will be of a certain economic benefit to the Channel Islands. Professional advice should be taken in all cases before attempting to establish a Channel Island connection, particularly with reference to the taxation anti-avoidance legislation of any other territories concerned.

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