The States of Guernsey is taking the next steps in its plans to implement the OECD’s Pillar Two framework, one of the major current BEPS workstreams in the OECD to address the taxation challenges of the digitalised global economy.
The Policy & Resources Committee will shortly be lodging a policy letter proposing the introduction of an “Income Inclusion Rule” and a “Qualified Domestic Minimum Top-Up-Tax” to provide for a 15% effective tax rate for large in-scope multinational enterprises, from 2025. This is in line with the intended approach set out in the 19 May 2023 Crown
Dependencies’ joint statement. The Income Inclusion Rule imposes a top-up tax on a parent entity in respect of the low taxed income of a foreign subsidiary. The Qualified Domestic Minimum Top-Up-Tax will bring the effective tax rate to 15% for in-scope entities in Guernsey that are not already charged an effective tax rate of 15% or more.
The States has worked with industry to inform implementation plans and will shortly be engaging with the business community on some specific design elements as part of the legislative drafting process.
The States will continue to monitor implementation internationally, as Guernsey remains committed to continuing to offer an attractive and globally competitive investment environment.
Deputy Lyndon Trott, President of the Policy & Resources Committee, said: “Guernsey has a well-established and stable corporate income tax system, and longstanding and independently assessed track record of meeting international standards. We are proud of our global leadership in tax cooperation, combatting money laundering and countering the financing of terrorism and proliferation financing, and in providing appropriate and effective transparency.
"Guernsey has consistently championed the need for a level playing field in tax cooperation and we have a long track record of maintaining the highest standards in tax transparency and fairness. In its implementation of the OECD Pillar Two initiative, Guernsey wants to provide certainty and stability for businesses in the island, ensuring Guernsey remains competitive while staying at the forefront of emerging global norms in tax matters.”
