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OECD Pillar One and Pillar Two

July 2023 Inclusive Framework Outcome Statement

The OECD Inclusive Framework met in Paris from 10 to 12 July 2023 to discuss the programme of work on the Two-Pillar solution addressing the tax challenges of the digitalising economy.

Jersey joined 137 other jurisdictions in an Outcome Statement which provides an update on the status of the Pillar One and Pillar Two workstreams.

Outcome statement on the Two-Pillar solution

Joint statement on Pillar Two by the Crown Dependencies

On 19 May 2023, the 3 Crown Dependencies made a statement on an intended approach to implementation of the Organisation for Economic Co-operation and Development (OECD) Pillar Two global minimum tax framework for large multinational groups.

The treasury ministers of Jersey, Guernsey and the Isle of Man have jointly announced their intentions in relation to Pillar Two implementation. Each Island intends to implement an Income Inclusion Rule (IIR) and domestic minimum tax from 2025, while continuing to monitor global implementation. 

This statement gives in-scope businesses certainty in relation to the 2024 tax year.

Crown Dependencies joint statement 

Local press release on the Crown Dependencies announcing agreed approach to Pillar Two Framework

Key principles to Jersey's approach

The key principles on which we have consulted industry and which guide Jersey's approach to Pillar Two are:

  • our commitment to maintaining an attractive business environment, based on certainty and simplicity is unchanged
  • most companies in Jersey will be outside the scope of the OECD two-pillar solution and should therefore see no change in their corporate tax rate
  • Jersey would be well placed to implement GloBE if it chooses to do so, since the Island has a trusted and well-resourced tax authority administering an existing corporate tax regime
  • the decision on GloBE will not be based on short-term revenue-raising considerations

These principles are set out in our tax policy reflections paper and are still relevant.

Jersey's tax policy reflections paper on the OECD Pillars

Background on the OECD Pillars

Since 2019, the OECD Inclusive Framework has been working to address the tax challenges arising from the digitalisation of the global economy. This work resulted in a two-pillar solution announced in October 2021, to which a political commitment was made by 137 jurisdictions, including Jersey.

Pillar One is made up of two parts, Amount A and Amount B. Amount A concerns only the very largest multinational groups of companies which have an annual turnover exceeding €20 billion. This pillar creates new rules about where tax is to be paid based on where the group's customers are based. Pillar One is still being developed.

The Pillar Two GloBE framework is a new set of international tax rules that will require in-scope multinational groups to pay a 15% minimum effective rate of tax in every jurisdiction in which they operate. The rules apply to groups with more than €750 million global annual revenue with an exclusion for certain investment entities, including investment funds. The starting point for the determination of GloBE income or loss will be the group's consolidated financial accounting position, to which adjustments will be made to calculate the final defined GloBE income. All other businesses that are below the threshold, including small and medium-sized companies and partnerships, will see no impact as they remain under Jersey's existing corporate income tax regime. 

Tax Challenges Arising from the Digitalisation of the Economy - Global Anti-Base Erosion Model Rules (Pillar Two) on OECD

Jersey's approach to the Subject to Tax Rule

The Subject to Tax Rule (STTR) is part of Pillar 2.  It is intended to ensure that double tax agreements entered into by developing countries do not prevent certain cross-border payments being taxed at rates of at least 9%.

All members of the Inclusive Framework are expected to amend their double tax agreements to reflect the STTR, if they are requested to do so by a treaty partner which is a developing country and a member of the BEPS Inclusive Framework.  This can be done either bilaterally, by agreeing a protocol to each relevant double tax agreement, or multilaterally, by signing the OECD's Multilateral Legal Instrument (MLI) implementing the STTR.

Jersey currently only has one double tax agreement with an Inclusive Framework member which is classed as a developing country for this purpose.  If asked to do so, Jersey therefore intends to implement the STTR by way of a bilateral protocol rather than the MLI. 

The OECD's model STTR provision

OECD's draft Pillar One Multilateral Convention, October 2023

On 11 October 2023, the OECD published a draft of the consolidated Multilateral Convention to Implement Amount A, alongside a draft explanatory statement and a draft statement of understanding on the way in which the tax certainty process for Amount A would operate. Between them, these document set out the current understanding of the Amount A rules, and note the areas where agreement has not yet been reached. Discussions on the final form of Amount A are continuing.

OECD summary of the Amount A rules

Draft Multilateral Convention to Implement Amount A of Pillar One

Queries and feedback

Interested stakeholders can email queries regarding the announcement or related issues to Revenue Jersey officers at with a subject line of 'Pillar Two Implementation'.

Queries about Jersey's double tax agreements should be referred to

Revenue Jersey values open dialogue with taxpayers and their advisers, and invites feedback on the outlined issues or confidential discussions of specific cases.

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