Jersey politicians vote for new tax regime

The new tax regime is based on the OECD's Pillar Two initiative, which aims to establish a global minimum tax rate of 15%

Jersey's politicians have unanimously agreed the most successful companies with a presence on the island should pay more tax, in line with a new global tax regime.

Most companies in Jersey pay no corporation tax, while all finance firms pay 10%.

But the decision means firms with global annual revenue of 750 million euros (£624m) or more will be charged 15% on their profits.

It is estimated the move could generate an extra £50m a year in Jersey.

Deputy Ian Gorst said the new tax regime would only apply to a small number of companies in Jersey

The new tax regime is based on the Organisation for Economic Co-operation and Development (OECD) Pillar Two initiative, which aims to establish a global minimum tax rate of 15%.

Minister for External Relations, Deputy Ian Gorst, who brought the proposals to the States Assembly, told the BBC it will only apply to a small number of companies in Jersey.

"There are about fourteen hundred in-scope companies in Jersey, that's less than 5% of companies who are here," he said.

When asked if it would make Jersey less attractive to multi-national companies, Mr Gorst said: "The rules around pillar two have been designed in such a way that large international corporations can't actually avoid paying that tax.

"So the choice for us is do we bring forward this legislation and on Jersey profits they pay tax here in Jersey, or do we not bring it forward and then they are paying tax elsewhere."

'Fair share'

Deputy Hilary Jeune described the policy as a game changer as it would stop the issue of "profit shifting" which developing countries are "especially exposed to".

She said: "It sets a floor on corporate taxes and reduces the incentive of multi-national companies being able to shift profits to low tax jurisdictions.

"Often avoiding their fair share of taxes in countries where they generate the most profit."

Thirty-nine States members voted for the Pillar Two initiative to be implemented with no votes against the plans.