UK Crown Dependencies on track to implement Pillar Two framework for 2025

The governments of Guernsey, the Isle of Man and Jersey, at a meeting on 17 May, reaffirmed their commitment to a joint approach to the OECD’s Pillar Two framework and noted they would shortly be commencing their respective legislative procedures to a common timeline with introduction for accounting periods commencing on or after 1 January 2025.

Pillar Two establishes the framework for a global 15% minimum effective tax rate for large multinational enterprises (MNEs), calculated at a jurisdictional level, with a top-up charge imposed on any low-taxed profits.

The three Crown Dependencies intend to implement an ‘Income Inclusion Rule’ and a domestic minimum tax to provide for a 15% effective tax rate for large in-scope MNEs, from 2025, while also remaining committed to continue offering attractive and globally competitive investment environments.

In a joint statement, the governments also agreed that working co-operatively and openly with each other on topics of mutual interest benefits all three islands and should continue.