The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting has announced agreement between 136 member jurisdictions – including the Isle of Man – on the final components and an implementation plan for a new two-pillar solution to reform international taxation rules.
This agreement builds on the G7 announcement in June and a previous agreement by 134 members of the Inclusive Framework announced in July.
It looks set to affect where the largest multinational companies will pay their tax in future years and will compel them to pay tax at a minimum effective rate of 15% – if the rules are implemented by sufficient jurisdictions.
Chief Minister Howard Quayle said:
‘It will be for the next administration to consider how best to position the Isle of Man in the light of these reforms, but I am confident we are well-placed. The two pillars, when eventually implemented by a critical mass of jurisdictions, will directly affect only a small number of businesses on the Island that are part of large multinational groups.
‘The Isle of Man is a small, agile jurisdiction with experience of working with local businesses, our partners and the other Crown Dependencies to respond and adapt rapidly to changes in global standards.’
Treasury Minister Alfred Cannan MHK said:
‘The Island has an established policy of supporting international standards developed by organisations like the OECD that are adopted globally and provide for a level playing field – this approach has proved vitally important to the health of the Island’s economy since it was first introduced in 2000.
‘I believe the only way for a small, open economy to thrive over the long-term is to work constructively with both local businesses and the international community. The Isle of Man’s record of successfully implementing international tax standards demonstrates this.
‘The Inclusive Framework has agreed an ambitious timeline for the implementation of its two-pillar solution but there remains considerable work to be done to bring it into operation globally. The Isle of Man Government will continue to engage closely with the Inclusive Framework as the technical work advances over the coming months, and this work will feed in to the Island’s future economic strategy.’
