About Pillar Two

​​​​​Pillar Two explained

​Pillar Two is part of an internationally agreed global minimum tax reform led by the Organisati​on for Economic Co operation and Development (OECD).

Its aim is to ensure that large multinational enterprise (MNE) groups pay a minimum effective tax rate of 15% on their profits in each jurisdiction where they operate.

In Jersey, Pillar Two is implemented through the Multinational Corporate Income Tax (MCIT) and a Qualified Income Inclusion Rule (IIR) (based on the OECD Model Rules).

Multinational Corporate Income Tax (MCIT) ​

MCIT is a domestic corporate income tax that applies to certain Jersey constituent entities within large MNE groups. It operates as a covered tax under the Pillar Two rules, to ensure that profits of Jersey constituent entities are taxed at an effective rate of at least 15% in line with the Pillar Two rules, so that they do need to be topped ​up by an IIR.

Qualified Income Inclusion Rule (IIR)​

The IIR is the rule that makes sure MNE groups pay at least 15% tax on their profits, no matter where those profits are made. If an ultimate parent entity (UPE) of an MNE group has subsidiaries in jurisdictions where they pay less than a 15% effective tax rate, the UPE’s jurisdiction steps in and through the IIR collects the “top-up tax” to bring the total tax paid up to 15%. If the jurisdiction of the UPE has not implemented the IIR, the obligation shifts to the next qualifying parent entity in the group structure, following a top-down approach. 

MCIT operates on a self assessment basis

This means that in scope MNE groups are responsible for assessing whether MCIT applies to them, calculating any tax due and meeting their registration, payment and reporting obligations.

MCIT is administered by Revenue Jersey.

Who MCIT may apply to

At a high level, MCIT may apply to MNE groups that:

• have consolidated annual revenue of €750 million or more in at least two of the four preceding accounting periods, and
• include one or more Jersey constituent entities

Some types of entities are excluded from MCIT. There are also de minimis exemptions and administrative concessions that may reduce any tax due or compliance.

Jersey constituent entities should check if Pillar Two applies to the group before taking any action.

MCIT does not apply to individuals and does not affect most local businesses.

What you need to do if MCIT applies to you

If a group is within scope of MCIT, one of the Jersey constituent entities need to:

1. Register for MCIT
   
2. Calculate and pay MCIT, if tax is due for the accounting period
3. Submit MCIT returns​

The Jersey constituent entity must register even if no MCIT is payable for the first periods, for example where the de minimis rule applies. However, entities excluded from MCIT are not required to be registered.

Key dates and timelines

MCIT applies to accounting periods beginning on or after 1 January 2025.​

If MCIT applies to the MNE group, the Jersey constituent entity must pay the tax in two instalments for each accounting period:

• 50% of the reasonable estimate of the MCIT amount must be paid within 5 months after the end of the accounting period
• the remaining balance must be paid within 12 months of the end of the accounting period

These payment deadlines are the same for all in scope MNE groups and are based on the accounting period of the group’s UPE.

If a payment deadline falls on a weekend or a bank or public holiday, payment must be made by the end of the previous working day.

Guidance and services

More detailed information:

​​