Multinational
Taxation (Global Anti-Base Erosion – IIR Tax) (Jersey) Law 202-
A LAW to implement the model rules
published by the Organisation for Economic Co-operation and Development as
“Tax Challenges Arising from the Digitalisation of the Economy –
Global Anti-Base Erosion Model Rules (Pillar Two): Inclusive Framework on
BEPS”.
Adopted by the
States 22 October 2024
Sanctioned
by Order of His Majesty in Council [date to be
inserted]
Registered by the
Royal Court [date
to be inserted]
Coming into force [date to be
inserted]
THE STATES, subject to the sanction of His Most
Excellent Majesty in Council, have adopted the following Law –
Part 1
Interpretation
1 Interpretation
(1) In
this Law –
“Comptroller” means the Comptroller of
Revenue described in Article 2 of the Revenue
Administration (Jersey) Law 2019;
“in-scope MNE
group” is defined in Article 4(2);
“IIR return”
is defined in Article 19;
“IIR tax” is
defined in Article 12;
“ITL 1961”
means the Income
Tax (Jersey) Law 1961;
“Model Rules” means the model rules
published by the OECD on 20 December 2021 as “Tax
Challenges Arising from the Digitalisation of the Economy – Global
Anti-Base Erosion Model Rules (Pillar Two): Inclusive Framework on BEPS”;
“OECD” means the Organisation for Economic Co-operation
and Development;
“OECD commentary” means –
(a) the
consolidated commentary published on 25 April 2024 by the OECD as “Tax
Challenges Arising from the Digitalisation of the Economy – Consolidated
Commentary to the Global Anti-Base Erosion Model Rules (2023)”, as
revised or re-issued from time to time; and
(b) all
agreed administrative guidance published by the OECD after 25 April 2024 (to
the extent that the guidance is not incorporated in a revised or re-issued
version of the consolidated commentary referred to in sub-paragraph (a));
“qualifying entity” is defined in Article 10;
“reporting
entity” is defined in Article 13;
“return due
date” is defined in Article 20.
(2) References
in this Law to a Rule are references to the corresponding Article in the Model
Rules.
(3) Terms
used in this Law that are defined in the Model Rules have the meaning given by
the Model Rules, unless that meaning is modified by this Law.
(4) Schedule 1
contains –
(a) a list of terms used in this Law (without modification) that
are defined in the Model Rules (paragraph 1 of Schedule 1); and
(b) a
list of terms used in this Law (with modification) that are defined in the
Model Rules (paragraph 2 of Schedule 1).
(5) For
the purposes of this Law, the location of an entity is to be determined in
accordance with Rule 10.3 as modified by Article 9.
Part 2
Implementation
of Model Rules: general provision
2 Implementation
of Model Rules
The Model Rules, as
modified by Part 3, have effect in Jersey.
3 Comptroller’s
duty to have regard to the OECD commentary
In determining an entity’s
liability to tax or a penalty under this Law, and in discharging the Comptroller’s
other functions under this Law, the Comptroller must have regard to the OECD
commentary.
4 Application
of this Law: large multinational enterprise groups
(1) This
Law applies in relation to an in-scope MNE group and its constituent entities, for
fiscal years beginning on or after 1 January 2025.
(2) For
the purposes of this Article, an MNE group is an “in-scope MNE
group” for a fiscal year if –
(a) the revenue
requirements of Rule 1.1.1 (modified, if appropriate, by Rules 1.1.2
and 6.1) are met in respect of the MNE group for that year; and
(b) at
least 1 constituent entity of the MNE group is, at any time in that year,
located in Jersey.
(3) References
in Parts 3 to 6 of this Law to an MNE group are references to an in-scope
MNE group.
Part 3
Modifications
and additions to Model Rules
5 Implementing
jurisdiction
References in the Model
Rules to an implementing jurisdiction are references to Jersey.
6 UTPR
not imposed
Rules 2.4 to 2.6 and
9.3 do not apply.
7 Filing
obligations
(1) A
GloBE information return submitted, in accordance with Article 15, by a
qualifying entity in relation to an MNE group is treated, for the purposes of
Rule 8.1.1, as being filed on behalf of each constituent entity of that
group that is located in Jersey.
(2) If
there is no qualifying entity in relation to an MNE group, Rule 8.1.1 does
not apply in relation to the constituent entities of the group that are located
in Jersey.
8 Designated
local entity
(1) The
“designated local entity” of an MNE group is an entity included in
the group that is –
(a) located
in Jersey; and
(b) designated
by the Comptroller for the purposes of this Article.
(2) In
determining which entity is to be designated, the Comptroller must have regard
to the nomination (if any) made by the constituent entities of the MNE group.
(3) The
Comptroller must, within a reasonable period of determining that an entity is
to be designated, give written notice of the designation to the entity.
(4) The
definition of “designated local entity” in Rule 10.1 is
treated as being modified accordingly.
9 Location
of an entity
(1) Rule 10.3
applies, for the purpose of determining the location of an entity, subject to
the exceptions in paragraphs (2) to (5).
(2) Paragraph (3)
applies in relation to an entity –
(a) that
is a flow-through entity created in Jersey; and
(b) is
not an entity to which paragraph (5) applies.
(3) The
entity is treated as a stateless entity (instead of its location being
determined under Rule 10.3.2).
(4) Paragraph
(5) applies to a flow-through entity that –
(a) is a
reverse hybrid entity;
(b) meets
1 of the criteria in Article 10(2) (qualifying entity: criteria); and
(c) is
regarded as resident in Jersey for the purposes of Jersey law.
(5) An
entity to which this paragraph applies is to be treated as being located in
Jersey (and is not to be treated as a stateless entity).
Part 4
IIR
tax
10 Meaning
of “qualifying entity”
(1) An
entity is a “qualifying entity” in relation to an MNE group if –
(a) the
entity is located in Jersey;
(b) the
entity is not an excluded entity;
(c) at
any time in the fiscal year, the entity owns (whether directly or indirectly)
an ownership interest in a constituent entity that is not located in Jersey;
and
(d) the
entity meets 1 of the criteria in paragraph (2).
(2) The
criteria are –
(a) the
entity is the ultimate parent entity of the MNE group;
(b) the
entity is an intermediate parent entity of the MNE group, and –
(i) the ultimate
parent entity of the MNE group is not required to apply a qualified IIR for the
fiscal year, and
(ii) there
is no other intermediate parent entity that owns a controlling interest in the
entity and is required to apply a qualified IIR for the fiscal year; or
(c) the
entity –
(i) is a
partially-owned parent entity, and
(ii) is
not wholly owned by another partially-owned parent entity that is required to
apply a qualified IIR for the fiscal year.
11 MNE
group required to determine amounts
(1) A
qualifying entity in relation to an MNE group must determine, for a fiscal year –
(a) the
GloBE income or loss of each of the MNE group’s constituent entities, in
accordance with Rules 3.1 to 3.5;
(b) the
adjusted covered taxes for each of the MNE group’s constituent entities,
in accordance with Rules 4.1 to 4.6;
(c) the
amount of top-up tax required to be attributed to each of the MNE group’s
low-taxed constituent entities in accordance with Rules 5.1 to 5.6 and
8.2;
(d) the
amount of the qualifying entity’s allocable share of the top-up tax of
each low-taxed constituent entity that is a member of the MNE group in
accordance with Rules 2.2 and 2.3; and
(e) the
aggregate of the amounts determined under sub-paragraph (d) (the
“qualifying entity’s total allocable share of the top-up
tax”).
(2) In
determining amounts for the purposes of paragraph (1), the qualifying
entity must also comply with –
(a) the
Rules contained in the following Chapters of the Model Rules, if and so far as
those Rules apply –
(i) Chapter 6
(corporate restructurings and holding structures),
(ii) Chapter 7
(tax neutrality and distribution regimes); and
(b) Rules 9.1
and 9.2 (transition rules) if and so far as those Rules apply.
12 Qualifying
entity required to pay IIR tax
(1) A
qualifying entity in relation to an MNE group must pay an amount equal to the
qualifying entity’s total allocable share of the top-up tax determined
under Article 11(1)(e) (the “IIR tax”) for a fiscal year.
(2) The
qualifying entity must pay the amount of IIR tax to the Comptroller on or
before the IIR return due date.
Part 5
Administrative
provisions
Division 1 –
Notification of entity filing the GloBE return
13 Meaning
of “reporting entity”
The “reporting
entity” in relation to an MNE group is –
(a) the
qualifying entity; or
(b) if
there is no qualifying entity, the designated local entity.
14 Requirement
to notify Comptroller of entity filing the GloBE return
(1) A
reporting entity in relation to an MNE group must, in relation to each fiscal
year, given written notice to the Comptroller stating whether the reporting
entity is the qualifying entity in relation to the MNE group (and is
accordingly required to file the GloBE information return under Article 15).
(2) If
the reporting entity is not the qualifying entity, the notice under paragraph (1)
must also –
(a) identify
the constituent entity of the MNE group that intends to file the GloBE
information return under the Model Rules;
(b) state
the jurisdiction in which that entity is located; and
(c) if
different, state the jurisdiction in which the entity intends to file the GloBE
information return.
(3) The
notice must be given in the form and manner specified by the Comptroller.
(4) The
notice, in relation to a fiscal year, must be given –
(a) for
the first fiscal year for which this Law applies to an MNE group, on or before
the date that is 18 months after the end of the fiscal year; and
(b) for
all other fiscal years, on or before the date that is 15 months after the
end of the fiscal year.
Division 2 –
GloBE information return
15 Qualifying
entity required to file GloBE information return
(1) The
qualifying entity must, on or before the return due date, submit to the
Comptroller a GloBE information return for the
fiscal year (subject to Rule 8.1.2).
(2) A
GloBE information return is not treated as submitted unless the requirements of
Article 16(1) and (if applicable) (2) are complied with in relation to the
return.
16 Content
and form of GloBE information return
(1) The
GloBE information return must –
(a) be
submitted in the form and manner specified by the Comptroller; and
(b) contain
the information required by the Comptroller.
(2) If
the GloBE information return is completed in a language other than
English, it must be accompanied by a translation into English.
17 Elections
under the Model Rules
An election by the
qualifying entity under the Model Rules may only be made by giving written
notice to the Comptroller in a GloBE information return submitted under Article 15.
Division 3 –
IIR returns
18 Qualifying
entity required to file IIR return
A qualifying entity must,
on or before the IIR return due date, submit to the Comptroller an IIR return
for the fiscal year.
19 Content
and form of IIR return
(1) An
“IIR return” is a return containing –
(a) an
assessment by the qualifying entity as to the amount of IIR tax payable by the
entity for the fiscal year; and
(b) the
other information reasonably required by the Comptroller by notice.
(2) An
IIR return must be submitted in the form and manner
specified by the Comptroller by notice.
Division 4 – GloBE information
returns and IIR returns: “return due date”
20 Meaning
of “return due date”
The “return due date” for a GloBE information return or
an IIR return, for a fiscal year, means –
(a) for the first fiscal year for which this Law applies to an
MNE group, is the date that is 18 months after the end of the fiscal year;
and
(b) for
all other fiscal years, is the date that is 15 months after the end of the
fiscal year.
Division 5 – Amendments to IIR
returns
21 Amendment
by a qualifying entity
(1) A
qualifying entity may, by notice to the Comptroller, amend an IIR return
submitted by it.
(2) No
amendment may be made under paragraph (1) after the end of the period of 5 years
beginning with the return due date.
(3) A
notice of amendment to an IIR return must be submitted in the form and manner
specified by the Comptroller by notice.
22 Amendment
by the Comptroller
(1) If
the Comptroller considers that an IIR return submitted by a qualifying entity
is, or has become, inaccurate, the Comptroller may amend the return.
(2) Except
in a case within paragraph (3), (5) or (6), the Comptroller must not amend
an IIR return later than 2 years after the return submission date.
(3) If
the inaccuracy is due to a careless action by a person, the Comptroller must
not amend the IIR return later than 5 years after the return submission
date.
(4) In
paragraphs (2) and (3), “return submission date”, in relation
to an IIR return, means the later of –
(a) the
IIR return due date;
(b) the
date the IIR return is submitted; and
(c) if the
IIR return is amended by the qualifying entity under Article 21, the date
the notice of amendment to the return is submitted.
(5) If
the inaccuracy is deliberate, or due to a deliberate act or omission by a
person, the Comptroller may amend the IIR return at any time.
(6) If
the inaccuracy is due to an alteration (after the submission of the IIR return)
to the amount of tax for which a constituent entity of the MNE group is liable
under the law of a jurisdiction other than Jersey, the Comptroller may amend
the IIR return at any time.
(7) If
the Comptroller amends an IIR return, the Comptroller must give written notice
to the qualifying entity of –
(a) the
amendment;
(b) the
revised amount of IIR tax under Article 12(1), that the qualifying entity
is required to pay for the fiscal year to which the IIR return relates; and
(c) if
the revised amount of IIR tax exceeds the amount of IIR tax paid, the date by
which the additional amount must be paid.
(8) A
reference (however expressed) in this Article to amending an IIR return
includes a reference to amending the assessment contained in it.
23 Request
for an amendment by the Comptroller
(1) This
Article applies if an IIR return becomes inaccurate (after its submission by a qualifying
entity) due to an alteration to the amount of tax for which a constituent
entity of the MNE group is liable under the law of a jurisdiction other than
Jersey.
(2) The
qualifying entity in relation to the MNE group may, by written notice, request
that the Comptroller amends the IIR return under Article 22(6).
(3) The
Comptroller must, within the period of 40 days beginning with the date on
which the request is received –
(a) decide
whether to accept or reject the request; and
(b) if
the request is rejected, give written notice to that effect to the qualifying
entity.
24 Assessments
by the Comptroller
(1) If
a qualifying entity fails to comply with Article 18 in relation to a
fiscal year, the Comptroller may make an assessment of the amount of IIR tax
payable by the entity for that year (but see paragraph (6)).
(2) The
Comptroller may, at any time –
(a) amend
an assessment made under paragraph (1); or
(b) make
an additional assessment under that paragraph.
(3) The
Comptroller must give notice to the qualifying entity of an assessment made
under paragraph (1).
(4) The notice of
assessment must include –
(a) the
amount of the assessment; and
(b) the
date by which the amount must be paid.
(5) An
entity has no right of appeal against an assessment made under paragraph (1).
(6) An
assessment made in relation to a qualifying entity for a fiscal year under
paragraph (1) is disregarded if, before the end of
the period of 12 months beginning with the date on which notice of that
assessment is given, the qualifying entity submits an IIR return for the same
fiscal year to the Comptroller.
(7) Article 22
applies in relation to the IIR return referred to in paragraph (6) as it
applies to an IIR return submitted in accordance with Article 18.
Division 6 –
Interest
25 Interest
for IIR tax
(1) This
Article applies if –
(a) an
entity fails to pay an amount of IIR tax, for a fiscal year, on or before the
IIR return due date for that fiscal year; and
(b) the
States have, by Regulations, specified a rate of interest for the purposes of
this Article.
(2) The
entity is liable to pay simple interest, at the rate specified by Regulations
under paragraph (1)(b), on the amount outstanding for the
period –
(a) beginning
with the day following the IIR return due date; and
(b) ending
with the day on which the amount of tax is fully paid.
(3) The
amount of interest payable under this Article is treated for all purposes
(including collection and recovery) as if it were an amount of tax charged and
payable under this Law.
(4) No
interest is payable if the amount on which interest is calculated under
paragraph (2) is less than £300.
(5) The
Comptroller may waive an entity’s liability to interest if the
Comptroller is satisfied that exceptional circumstances prevented the reporting
entity from complying with Article 12(2) at the required time.
Part 6
Offences
and penalties
Division 1 –
Offences
26 Offences
(1) It
is an offence for a qualifying entity in relation to an MNE group to fail,
without reasonable excuse, to comply with a requirement imposed by –
(a) Article 15
(requirement to file GloBE information return); or
(b) Article 18
(requirement to file an IIR return).
(2) An
entity that commits an offence under paragraph (1) is liable to a fine.
(3) Article 21C
of the ITL 1961 (offences by bodies corporate and
others) applies in relation to an offence under paragraph (1) as it
applies to an offence under Article 21B of that Law.
Division 2 –
Civil penalties
27 Penalty
for failure to notify Comptroller under Article 14
(1) This Article applies if a reporting entity in relation to
an MNE group fails to give notice in accordance with Article 14 on or
before the return due date.
(2) The entity that was, at the end of the return due date, the
reporting entity in relation to the MNE group is liable to a penalty in respect
of the failure.
(3) The
amount of the penalty is determined by the Comptroller and is a maximum of
£3,000.
28 Penalty
for failure to submit a return
(1) This
Article applies if a qualifying entity in relation to an MNE group –
(a) fails to submit a GloBE information return to the
Comptroller on or before the return due date; or
(b) fails
to submit an IIR return to the Comptroller on or before
the return due date.
(2) The
entity that was, at the end of the return due date, the qualifying entity in
relation to the MNE group is liable to a penalty in respect of the failure.
(3) The
amount of the penalty, in relation to each failure, is –
(a) if
the return is submitted before the end of the period of 1 month beginning
with the return due date, the basic penalty amount;
(b) in
any other case, the lower of –
(i) the basic penalty
amount plus the additional penalty amount, and
(ii) the
maximum penalty.
(4) The
basic penalty amount is £1,000.
(5) The additional penalty amount is £1,000 multiplied by the
number of complete months, after the end of the period referred to in paragraph (3)(a)
for which the entity fails to submit the return.
(6) The maximum penalty is
£12,000.
29 Penalty
for inaccurate IIR return
(1) If
a qualifying entity, in relation to an MNE group, carelessly or deliberately
provides to the Comptroller an IIR return that is incorrect in a material
particular, the entity is liable to a penalty.
(2) The
amount of the penalty is determined by the Comptroller in accordance with this
Article.
(3) If
the IIR return is incorrect in more than 1 material particular, the entity is
liable to a penalty for each incorrect material particular.
(4) If
the act was done –
(a) carelessly,
the amount of penalty is not more than 30% of the difference;
(b) deliberately,
the amount of penalty is not less than 30% and not more than 100% of the
difference.
(5) But
if the entity admits to the Comptroller the fact of the incorrect statement
other than in response to a discovery, or likely imminent discovery, of it by
the Comptroller –
(a) in
the case of paragraph (4)(a), the amount of penalty is not more than 10%
of the difference;
(b) in
the case of paragraph (4)(b), the amount of penalty is not less than 10%
and not more than 80% of the difference.
(6) The
amount of penalty is additional to the amount of tax that is chargeable on the entity (calculated as if the
statement were corrected).
(7) In
this Article –
(a) “act”
means the conduct described in paragraph (1);
(b) “difference”
means the difference between the amount of tax that would be chargeable on the
qualifying entity if it were calculated on the basis of the incorrect return
and the amount if the return were correct.
Division 3 –
Administration of civil penalties
30 Penalty
notice and payment
(1) If
an entity is liable to a penalty under Article 27, 28 or 29 the
Comptroller may serve a written notice (a “penalty notice”) on the
entity in accordance with this Article.
(2) In
the case of a penalty under Article 27 or 28, the penalty notice must
specify the amount of the penalty.
(3) In
the case of a penalty under Article 29, the penalty notice must specify –
(a) the
amount of IIR tax that would be chargeable calculated on the basis of the
incorrect statement;
(b) the
amount of IIR tax that is chargeable (calculated as if the statement were
corrected);
(c) the
difference between the amounts calculated under sub-paragraphs (a) and
(b);
(d) the
amount of penalty determined by the Comptroller; and
(e) whether
the penalty is calculated under Article 29(4)(a) or (b) and, if relevant,
that Article 29(5) applies.
(4) Subject
to Article 32(3), an entity on which a penalty notice is served must pay
the amount of the penalty no later than 40 days after the day on which the
notice is served.
31 Application
for a waiver
(1) This
Article applies where –
(a) an
entity is liable to a penalty under Article 27 or 28; and
(b) a
penalty notice, in respect of that penalty, is served on the entity under
Article 30.
(2) The
entity may, before the end of the period of 40 days beginning with the day
on which the penalty notice is served, apply to the Comptroller in writing for
a waiver under this Article.
(3) The
Comptroller may waive an entity’s liability to a penalty if satisfied
that exceptional circumstances prevented the entity from complying with Article 14,
15 or 18 (as the case may be) at the required time.
(4) If
an entity makes an application under paragraph (2), the Comptroller must
notify that entity of whether or not the liability has been waived.
Part 7
Appeals,
recovery and supplementary administrative provisions
32 Appeals
(1) An
entity may appeal to the Commissioners against –
(a) an
amendment to an IIR return made by the Comptroller under Article 22;
(b) a
decision under Article 23 to reject a request for an amendment to an IIR
return;
(c) a
penalty notice served under Article 30;
(d) a decision
to refuse an application for a waiver of a penalty under Article 31.
(2) An
appeal is brought by giving notice to the Comptroller before the end of the
period of 40 days beginning with the day on which notice of the amendment
or decision, or the penalty notice, is given.
(3) If
an appeal is brought under paragraph (1)(c) or (d), the penalty notice is
of no effect pending the final determination or withdrawal of the appeal.
(4) Part 6
of the ITL 1961 applies, with the necessary modifications, to an appeal under
this Article as if it were an appeal under that Law against an assessment.
(5) In paragraph (1), “Commissioners” means a
Commission of Appeal constituted under Article 5 of the Revenue Administration (Jersey) Law 2019.
33 Proceedings
for recovery of tax and penalties
(1) Proceedings
for the recovery of unpaid tax, or for the recovery of a penalty, due under
this Law may be instituted by the Treasurer of the States –
(a) in
the case of IIR tax –
(i) at any time after
the IIR return due date, or
(ii) in
the case of an additional amount of IIR tax required to be paid by a date
specified in a notice given by the Comptroller under Article 22(6), at any
time after the specified date.
(b) in the case of a penalty –
(i) at any time after
the expiry of the period specified in Article 30(4) if no appeal is
brought, or
(ii) if
an appeal is brought, at any time after the payment of the penalty is due
following the final determination of the appeal or at any time after the withdrawal
of the appeal.
(2) Article 44 of the ITL 1961 (certificate of
Comptroller admissible in evidence) applies for the purpose of the recovery of
tax due under this Law as it applies for the purpose of the recovery of income
tax, but as if –
(a) references
to income tax in paragraph (1) were references to IIR tax; and
(b) the
reference to the year ended 31 December in paragraph (1) were a reference
to the last day of the fiscal year.
34 Payments
to, and repayments by, States’ Treasurer
Articles 46 to 48 of the ITL 1961 apply in relation to IIR tax
as they apply in relation to income tax (and, for that purpose, references in
those Articles to the ITL 1961 are to be treated as references to this Law).
Part 8
Citation,
commencement and other matters
35 Amendment of definitions
The States may, by
Regulation, amend this Law to amend the definition of any term defined in this
Law, other than the definition of “Model Rules”.
36 Consequential
amendments
Schedule 2 contains
consequential amendments to the Revenue
Administration (Jersey) Law 2019.
37 Citation
and commencement
This Law may be cited as
the Multinational Taxation (Global Anti-Base Erosion – IIR Tax)
(Jersey) Law 202- and comes into force on 1 January 2025.