Jersey, Guernsey and the Isle of Man have jointly agreed to adopt the 15% global minimum tax rate, as set out as part of the OECD's Pillar two.
- In 2022, the Organisation for Economic Co-operation and Development (OECD) published the Global Anti-Base Erosion (GloBE) rules that form part of Pillar Two, its ongoing work against Base Erosion and Profit Shifting (BEPS).
- These rules aim to ensure a minimum global tax rate of 15% for all large Multi-National Enterprise groups (MNEs) and were agreed upon by 136 out of 140 OECD members, including the three Crown Dependencies.
- The rules will apply to all MNEs with a consolidated turnover of more than €750 million and are expected to generate about $150 billion in additional worldwide taxes.
- The UK aims to introduce the rule from 31 December 2023, following consultation, and will be delivered via the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR), as announced in the Spring Budget 2023.
- The three territories have agreed together to introduce either their own Income Inclusion Rule or other form of top-up tax, along with a domestic minimum corporate tax rate, with a view to implement from 2025.
- All three territories will retain the right to adjust this policy if other countries do not act accordingly.
Useful guides on this topic
OECD publishes 15% global minimum tax rate details that will raise $150 billion
The OECD has published further details for the Global Anti-Base Erosion (GloBE) rules that form part of Pillar Two of its ongoing work against Base Erosion and Profit Shifting (BEPS). These are the rules that aim to ensure a minimum global tax rate of 15% for all large Multi-National Enterprise groups (MNEs).
BEPS & Diverted Profits Tax (for SME owners)
What is BEPS? What is Diverted Profits Tax? Will either of these affect me or my SME clients?
Diverted Profits Tax
Large Multinational Enterprises (MNEs) that use arrangements between connected parties to divert profits away from the UK and avoid UK tax, will be subject to the Diverted Profits Tax (DPT). Who does it apply to? What are the rules?