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Pillars One and Two

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Guernsey was among 130 members of the Inclusive Framework to join the Statement on a Two-Pillar Solution to Address the Tax Challenges Arising From the Digitalisation of the Economy - 1 July 2021 ( establishing a new framework for international tax reform. A new two-pillar solution to reform international taxation rules was subsequently issued by 136 members of the Inclusive Framework on 8 October 2021.

The two-pillar solution focuses on the world's largest Multi-National Enterprises (MNEs) as follows:

Pillar One

Pillar One creates new profit allocation rules for MNEs with global turnover in excess of €20 billion and profitability in excess of 10%. This aims to ensure a fairer distribution of taxing rights to the market countries and jurisdictions where the MNEs have business activities, regardless of whether they have a physical presence there.

There is an exemption for certain regulated financial services activities, such as funds, taking them out of scope of the proposals.

Pillar One also seeks to introduce a simplified and streamlined application of the arm's length principle to some in-country baseline marketing and distribution activities.

Pillar Two

Pillar Two consists of:

GloBE sets a new global benchmark for the taxation of the world's largest cross-border groups (with a turnover over €750 million per annum) ensuring that they will pay a minimum effective rate of 15% corporate tax in every country they operate in. This is a common approach, that does not require jurisdictions to change their corporate income tax systems.

GloBE also allows a jurisdiction to domestically implement a Qualified Domestic Minimum Top-up Tax, that effectively increases the domestic tax liability of an MNE group's profits in a jurisdiction up to the 15% rate, avoiding any top-up tax arising.


On 19 May 2023, the Treasury Ministers of Guernsey, Jersey and the Isle of Man jointly announced their intentions in respect of the global Pillar Two initiative to set a minimum effective tax rate for the world's largest multinational enterprises.

The Islands intend to implement an "Income Inclusion Rule" and a domestic minimum tax to provide for a 15% effective tax rate for large in-scope multinational enterprises, from 2025. Although the Islands will continue to monitor implementation internationally and adapt according to developments which may require adjustments to these implementation plans.

Businesses in Guernsey below the threshold will not be affected by the implementation of Pillar Two.

This page will be updated when further information is available.

Useful Links

The OECD has published a number of documents regarding these proposals.

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