Senator Ian Gorst welcomed the ‘clarity’ brought by the Organisation for Economic Co-operation and Development, following their announcement about a ‘two-pillar solution’ for a new global tax framework on Friday.
Earlier this year, the US government announced that it would be seeking global tax reforms to prevent companies from shifting their profits to low-tax jurisdictions.
Senator Gorst said: ‘We will continue to engage in a proactive way with the OECD, EU and global bodies to combat aggressive tax avoidance and profit shifting, and to develop international tax standards. Our focus continues to be on adding value to the global economy by offering a stable, certain and attractive environment for supporting the growth of cross-border investment in a well-regulated and transparent manner.’
The minister said Jersey’s government continued to be ‘fully engaged in detailed discussions on the form and implementation of the new proposed global tax rules’ following an initial agreement in July.
He added: ‘This is important to protect the Island’s interests as a strong, transparent and well-regulated international finance centre.’
The Island’s government says they anticipate the changes to have a ‘limited impact on Jersey’, with the new international tax rules applying to the largest global multinational companies and comprising a package, called Pillars One and Two, which will sit alongside the domestic tax regime of a jurisdiction.
– Pillar One creates new profit allocation rules for the world’s largest multi-national groups of companies (expected to be fewer than 100), excluding regulated financial services. For that small, targeted group, a portion of their profits would be reallocated to the jurisdictions where their goods and services are used.
– Pillar Two would introduce a new framework of taxation, where companies falling within its scope – multinational enterprises that meet a €750 million profit threshold –would pay a minimum effective rate of taxation on their global profits, calculated on a country-by-country basis. The level of the rate has been set at 15%.
