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The Organisation for Economic Co-operation and Development (OECD) and G20 are updating international tax laws to reflect the increasing digitalisation and globalisation of businesses.
Political agreement on an OECD two-pillar solution was agreed in October 2021 with 137 countries, including Jersey. This two-pillar initiative will address the tax challenges arising from the digitalising economy.
The initiative only applies to the largest multinational groups (MNEs) and therefore most entities doing business in Jersey will not see any changes to their corporate tax position.
Pillar
One concerns only the very largest MNEs with an annual global turnover
exceeding €20 billion. This pillar will reallocate certain profits of
in-scope groups to countries where the group’s customers are
located. Pillar One is a minimum standard that Jersey will be required
to implement as a signatory of the OECD Inclusive Framework's October
2021 statement.
There will be an exclusion from Pillar 1 for regulated financial services.
Pillar Two has 2 elements:
In scope MNEs will include only those with global annual revenue greater than €750 million. GloBE is not a Minimum Standard but a Common Approach.
OECD Pillar Two Model Rules and Commentary on OECD website
The Government of Jersey has issued a policy paper which aims to:
Our aim is for Jersey to remain a competitive place to do business.
OECD Pillars 1 and 2: tax policy reflections
Jersey’s 10 key principles on the OECD two-pillar initiative