News

Scrutiny publishes its review of the proposed new global tax regime for Jersey

​A Corporate Services Scrutiny Sub-Panel has conducted an extensive review into the proposed changes to Jersey's tax regime through the adoption of the Organisation for Economic Co-operation and Development's (OECD) Pillar 2 initiative. Pillar 2 aims to establish a global minimum tax rate (15%) on the profits of multinational enterprises (MNEs) above a certain threshold, regardless of where they are headquartered or operate.

The Sub-Panel agreed with the Government of Jersey that non-implementation wasn't an option given the importance in maintaining Jersey's global reputation as a transparent and well-regulated offshore financial centre. Non-adoption would also have resulted in other jurisdictions claiming tax revenues which could otherwise be due to the Island. However, the review focused on the Government's proposed approach to implementing these new standards, the impact on those targeted businesses based in the Island, and the long-term sustainability and risks of the proposals.

The Sub-Panel found that the Government's proposed form of implementation will likely bring both opportunities and challenges. The Sub-Panel therefore made seven recommendations, including emphasising the importance of continued collaboration with the OECD and ongoing monitoring to ensure that Jersey's implementation remains effective and fully aligned with global expectations. 

The Sub-Panel also evaluated Jersey's proactive approach, contrasting this with the approaches adopted by Guernsey and the Isle of Man. The Sub-Panel recognises that Jersey's willingness to differentiate itself through a carefully thought through implementation demonstrates a strong commitment to maintaining its competitive position within an evolving global tax landscape. However, the Sub-Panel has also identified potential risks associated with this proactive stance, underscoring the importance of ongoing monitoring and adaptation, along with effective communication to ensure that Jersey remains attractive to MNEs while mitigating the potential for criticism of the Island from outside. 

Chair of the Sub-Panel, Deputy Jonathan Renouf, said: 'The OECD Pillar 2 initiative is a significant international tax reform and we commend the Government and stakeholders for the extensive work that has gone into formulating Jersey's response. It is critically important that Pillar 2 is implemented in a way that is supportive of Jersey's role as an International Finance Centre. However, Government needs to continually monitor in a transparent and informed manner, the challenges which are inevitable from introducing a new regime. In particular, we highlight the absence of a fully developed dispute resolution mechanism, and that the jurisdictional differences in how the OECD's framework is interpreted could lead to conflicts in the future. Jersey's ability to adapt to the changing global tax landscape and its monitoring, will determine its economic resilience and prosperity.'

The Sub-Panel, chaired by Deputy Jonathan Renouf, sits within the umbrella of the Corporate Services Scrutiny Panel. It also includes: Deputy Montfort Tadier, Deputy Max Andrews, Deputy Hilary Jeune, and Constable David Johnson.

For further information about the Review and to read the report, visit: Scrutiny review (gov.je)