Jersey approves changes to taxing large companies

Jersey's parliament has passed changes to corporate taxation that will see large multinational companies pay 15% as part of a global crackdown on tax avoidance.

The OECD's Pillar Two framework is an worldwide initiative to establish a minimum 15% tax rate for multinational firms making more than 750 million euros annually.

Its adoption across jurisdictions is to stop companies moving their profits around to avoid paying tax on them.

Jersey's States Assembly has unanimously agreed the required measures.

It is estimated to affect around 1,400 Jersey-based companies, whose liabilities will increase from either zero or 10% under the new regime.

That will mean a windfall for the public purse.  Ministers have said there is much uncertainly about the amount of additional revenue that will be generated, but previous estimates have put it at around £50m.

Last month, economic advisers the Fiscal Policy Panel recommended the extra income is used to rebuild reserves.

The changes will take effect from 2025.

Welcoming the States' decision, the government said:

"Jersey has a long-standing corporate income tax regime and Revenue Jersey is well resourced to deal with the roll out of Pillar 2. Over 95% of Jersey companies will be unaffected by this Pillar 2 legislation and will remain within the existing Jersey income tax regime."

Treasury Minister Deputy Elaine Millar added: “The Government is committed to providing an internationally competitive business environment in Jersey and is working with industry and the Jersey Financial Services Commission in a tri-partite Ministerial Working Group.

"One of the outcomes will be a new Pillar 2-compliant Qualifying Refundable Tax Credit (QRTC) regime. This regime will be effective in incentivising business growth and deepening business ties with Jersey."

Ministers have pledged to keep the administrative burden of complying with Pillar 2 as low as possible.

External Relations Minister Deputy Ian Gorst says the passing of the laws for the new tax regime 'maintains Jersey’s reputation as a forward-thinking jurisdiction'.

"I am confident that Jersey is well positioned to implement this new Pillar 2 regime and maintain a globally competitive business environment for our taxpayer customers worldwide.”