Friday 02 July 2021
The OECD has been working to establish a global solution to reform the international corporate tax framework, impacting how large multi-national 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.
The recent announcement by the G7 Finance Ministers supported the OECD initiative, with an agreed set of taxation rules on Pillar 1 and a minimum effective rate of at least 15% in respect of Pillar 2. At the recent Inclusive Framework meeting, an overwhelming majority of jurisdictions reached agreement on the proposals. Technical discussions will now continue, developing a detailed implementation plan by October.
Deputy Mark Helyar, Treasury lead for the Policy & Resources Committee said:
"Guernsey works closely with the OECD on these international tax matters including the original Base Erosion and Profit Shifting (BEPS) initiative, the Forum on Harmful Tax Practices as well as the more recent OECD commitment to address the challenges from digitalisation of the economy, which includes a proposal that large multinational enterprises should pay a minimum effective rate of tax on its profits. Guernsey supports the objective of reaching agreement on a worldwide approach, and a level playing field, which will help avoid the complexities of unilateral action by countries. The OECD have now reached agreement, following years of negotiations, in which Guernsey has taken part. Guernsey welcomes this further milestone and will continue to participate actively in the ongoing technical discussions, coordinating with Jersey and the Isle of Man, as a detailed implementation plan is developed."
"The recent European Commission communication entitled the "Communication on business taxation for the 21st century" highlights the importance of reaching an agreement in the OECD and in the G20. Guernsey also works closely with the EU Commission and the EU Code of Conduct Group on Business Taxation reflected in the commitments it has made to EU tax standards. It has a long track record of adapting to meet new international tax standards. Guernsey's tax regime was assessed as being non-harmful against the criteria of the Code of Conduct in 2013. In 2019 the EU reaffirmed its previous assessment that Guernsey is a cooperative jurisdiction with respect to tax good governance following the implementation of new substance requirements. Guernsey continues to engage with the OECD and EU on international tax matters."
