ARTICLE · 13 JULY 2023

Crown Dependencies Agree Joint Approach To OECD Pillar Two Framework

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The governments of Guernsey, Jersey and the Isle of Man announced on 19 May that they had agreed on a joint approach to implement the OECD's Pillar Two framework to ensure certainty for businesses in each of the three jurisdictions.

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The governments of Guernsey, Jersey and the Isle of Man announced on 19 May that they had agreed on a joint approach to implement the OECD's Pillar Two framework to ensure certainty for businesses in each of the three jurisdictions.

The Pillar Two framework sets a new global benchmark for the taxation of large multinational enterprises (MNEs) with a turnover exceeding ?750 million per annum to ensure that they will pay a minimum effective rate of 15% corporate tax in every country in which they operate.

The islands propose to introduce an 'Income Inclusion Rule' and a domestic minimum tax to provide for a 15% effective tax rate for large in-scope MNEs, from 2025. Most businesses in the islands will not be within scope and will continue to be subject to their respective 'zero/ten' corporate tax regimes.

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