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Review: OECD Pillar 2 Review

Committee/Panel: Corporate Services Panel
Launch Date: 29 August 2024 Close Date: To be advised
Submissions Deadline: To be advised Ministerial Response Date: To be advised
Review Status: Gathering evidence

The Panel, chaired by Deputy Jonathan Renouf is a sub-panel of the Corporate Services Scrutiny Panel. It also includes: Deputy Montfort Tadier, Deputy Max Andrews, Deputy Hilary Jeune, and Constable David Johnson. 

The Sub-Panel has launched its review and will be inviting submissions from targeted stakeholders. Public hearings will also be held with the Minister for External Relations and Minister for Treasury and Resources.

On completion of its evidence gathering and analysis, the Sub-Panel intends to present a Scrutiny Report of its findings, which will include key recommendations for Government, in late 2024. 

About

The Organisation for Economic Cooperation and Development (OECD) Pillar 2 initiative represents a significant advancement in international tax reform, aimed at addressing the challenges posed by globalisation and digitalisation. The initiative, formally known as the Global Anti-Base Erosion proposal, is part of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting. It seeks to ensure that multinational enterprises (MNEs) pay a minimum level of tax on the income they earn in each jurisdiction, thereby reducing opportunities for tax avoidance and enhancing global tax fairness.

Pillar 2 establishes a global minimum tax rate that applies to profits of MNEs above a certain threshold, regardless of where they are headquartered or operate. This initiative aims to level the playing field by curbing profit shifting to low or no-tax jurisdictions and ensuring that all countries, including developing economies, can collect a fair share of tax revenues.

The implementation of a global minimum tax rate will have significant implications for Jersey's economy, regulatory framework, and its competitive position as a jurisdiction for MNEs. To align with new OECD standards, Jersey will need to adjust its domestic tax policies, altering corporate tax rates and compliance requirements.

Adopting OECD Pillar 2 standards is essential for maintaining Jersey's reputation and global standing. Additionally, it presents potential growth opportunities for Jersey to innovate and diversify its financial services offerings by positioning itself as a compliant and forward-thinking jurisdiction.

Given the importance of this global initiative, a Sub-Panel has been established to ensure focused and targeted scrutiny of the proposals. This review provides the opportunity to conduct a comprehensive analysis of the implementation strategy proposed by the Government of Jersey, ensuring the legislation and strategy deliver the optimal outcome for the Island.

Terms of reference

​1. Conduct a comprehensive review of Propositions P.53/2024 (Draft Multinational Taxation (Global Anti-Base Erosion – IIR Tax) (Jersey) Law 202-) and P.54/2024 (Draft Multinational Corporate Income Tax (Jersey) Law 202-), with consideration to how the underpinning draft legislation and the Government of Jersey's approach for implementing the Organisation for Economic Cooperation and Development (OECD) Pillar 2 Framework provides the optimal outcome for Jersey.

2. Assess Jersey's proposed implementation of the OECD Pillar 2 Model Framework.

3. Evaluate the draft legislations' alignment with the Government's intended objectives and policy goals.

4. Assess the feasibility of the draft legislation for implementing the OECD Pillar 2 Framework, focusing on how it ensures that Jersey's approach can be practically implemented, including the evaluation of timelines, processes, and resource allocation.