The OECD has been working to establish a global solution to reform the international corporate tax framework, impacting how large multinational enterprises are taxed around the world.
That framework is based on two broad work streams, Pillar 1 relating to the proposal for partial re-allocation of taxing rights and Pillar 2 which proposes to introduce an agreement that large multinational enterprises pay a minimum effective rate of tax on their profits. These proposals seek to address issues that are linked to the increasing globalisation and digitalisation of the economy.
Since July, when the G7 Finance Ministers supported the OECD initiative and over 130 jurisdictions (including Guernsey and the other Crown Dependencies) reached agreement on the proposals, technical discussions have continued.
These have led to an agreed set of taxation rules on Pillar 1 and a minimum effective rate agreed at 15% in respect of Pillar 2.
The proposals also recognise that investment funds should not be in scope of Pillar 2 and there is an exclusion for regulated financial services from Pillar 1.
At the recent Inclusive Framework meeting, an overwhelming majority of jurisdictions (including Guernsey, Jersey and the Isle of Man) signed up to these proposals and the detailed implementation plan that was announced. Technical discussions will now continue, developing model rules and the multilateral instruments/conventions that will be needed to implement them.
Deputy Mark Helyar, Treasury lead for the Policy & Resources Committee said:
"Guernsey has continued to work closely with the OECD on these international tax matters, participating at every stage of the discussions, to represent the interests of our Islands.
Guernsey supports the objective of reaching agreement on a worldwide approach and a level playing field which, as we ourselves have previously argued, will help avoid the complexities of unilateral action by individual countries.
Guernsey welcomes this further milestone and officials will continue to participate actively in the ongoing technical discussions, coordinating with Jersey and the Isle of Man."