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Two new roles still need to be filled in the States to implement new global corporate tax rules with implementation day creeping ever closer.
The previous Policy & Resources Committee approved the creation of a new three-person team to implement the changes and monitor ongoing compliance with incoming international taxes for large companies being led by the Organisation for Economic Co-operation and Development (OECD).
One officer post has been filled to date, with two others recently being advertised on the States’ website. That comes soon after the government significantly upgraded the amount of cash expected to be collected from businesses in-scope by £20m per year.
The Revenue Service said that many jurisdictions signed up to the tax pact have identified the need for additional administrative resources.
“The Pillar One and Two proposals introduce a new international framework for the taxation of large multinational enterprises, that are extremely complex in nature and introduce new tax reporting and exchange of information requirements,” it said.
“In line with other international tax standards, these proposals will also be subject to a peer review process, which will analyse the legislation/guidance introduced, the systems in place and resources allocated to the tax authority to monitor compliance and ensure timely exchange of information to other jurisdictions.”
The OECD has proposed a two-pronged approach to gather more tax from large companies across the world in response to digitisation of the economy. Hundreds of countries have signed up to the scheme, which will see consistent profit charges for the largest multi-national companies.
Pillar One focuses on digital firms and suggests relocating taxing responsibility to countries where users and consumers are located, rather than where the company is physically located. Regulated financial services are excluded.
Pillar Two focuses on ensuring the largest firms would pay a minimum level of tax regardless of where they are based to avoid the shift of profits to low-tax jurisdictions. Funds are excluded.
Pictured: The new rules will come into effect from 2025.
The teams’ responsibilities include drafting the new legislation, developing systems, analysing tax filings and the agreed methodology, raising queries, and ensuring the correct amount of tax has been collected.
It’s also expected to speak with local and international professionals, represent the island at technical conferences on the new rules “and participate in any OECD, or other regional, peer reviews of Guernsey’s implementation of this new framework”.
The team will also monitor compliance of partnerships with the economic substance requirements, which were extended to partnerships from 1 July 2021.
States Treasury initially forecasted that up to £10m extra would be collected annually from companies under the arrangements, but last month tripled that total after new information from the OECD and other countries came out on the approach to implementation.
One deputy who has consistently argued the total would be much higher than initial projections, Charles Parkinson, recently told Express that he expects the total to be far higher than the new estimate.
"I'm glad to see so many converts to corporate tax reform,” he said at the time.
The changes need to be implemented by 2025, and will start to be collected from 2026.
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