JER Tax said on May 21, Jersey announced it would follow its May 2023, commitments.
JER States statement detailed these commitments, with legislation for groups in-scope, i.e. multinational groups of companies with global annual turnover of over €750mn.
They include an Income inclusion rule (IIR), and with new standalone multinational corporate income tax (MCIT), to sit alongside existing corporate income tax regime.
MCIT will align with OECD GloBE model rules so that Jersey companies and Jersey branches of in-scope multinational groups pay an effective rate of 15% on profits.
Aims to support diverse geographical investment base and address certain unintended double taxation challenges created by pillar 2 implementation for some taxpayers.
Will operate independently of existing regime, reducing need for top-up calculations.
Pillar 2 compliant support package will be proposed for productivity, digital capacity and skills, while reducing operating costs/growth as an international finance center.
Jersey States said it will not be enacting an undertaxed profits rule at this time.
Next Steps and Effectiveness
Remaining details are due to be finalized shortly, with intention to publish draft IIR and MCIT legislation in summer 2024, when it is lodged with States assembly parliament.
Changes are proposed to apply to accounting periods, beginning on Jan. 1, 2025.
On Oct. 22, 2024, JER States said it adopted law to implement Pillar 2 from 2025.
It issued anAct declaring that the Multinational Taxation (Global Anti-Base Erosion – IIR Tax) (Jersey) Law 202- has immediate effect; act based on draft P.53/2024.
For accounting periods starting on or after Jan. 1, 2025, in-scope Jersey companies and branches of multinational groups will pay an effective rate of 15% under MCIT.
JER Tax will also impose a top-up tax on low-taxed profits outside of the Island under the OECD’s Pillar 2 IIR, but will not apply the Undertaxed Profits Rule (UTPR).
JER has a long-standing corporate income tax regime; over 95% of Jersey companies will be unaffected by Pillar 2 law and will remain within the existing income tax regime.
