Channel Islands: Pillar Two draft legislation published (Jersey)
Scheduled for debate in Jersey’s Parliament on October 1, 2024
The Minister for Treasury & Resources on August 14, 2024, filed draft legislation in Jersey’s Parliament setting out the proposed implementation of the OECD’s Pillar Two framework.
This includes two separate pieces of draft legislation:
- Legislation proposing the introduction of an income inclusion rule (IIR)
- Legislation proposing a new standalone multinational corporate income tax (MCIT)
The proposed rules would apply only to multinational groups of enterprises (MNEs) with more than €750 million in global annual revenue. Businesses below this threshold will see no impact and will continue to operate under Jersey’s existing zero/ten corporate income tax regime. For those large MNEs that are in scope, the new rules will take effect for accounting periods beginning on or after January 1, 2025.
Under the MCIT, Jersey companies and Jersey branches of in-scope MNEs would be required to pay an effective rate of 15% on their Jersey profits. Meanwhile, the IIR will subject ultimate parent entities and/or intermediate parent entities based in Jersey to a top-up tax on their non-Jersey profits, but only under certain limited circumstances.
Consistent with the communication released by the government of Jersey in May 2024, it has been confirmed that Jersey will not be implementing an undertaxed profits rule at this time.
The draft legislation is scheduled for debate in Jersey’s Parliament on October 1, 2024.
Read an August 2024 report prepared by the KPMG member firm in the Crown Dependencies