OECD tax rules warning for Jersey

Tuesday 26 May 2015

There could be a “significant impact” on the Channel Islands from new OECD rules that will make it easier for counties to levy tax on companies doing business across borders, PwC has warned.

The OECD proposals would mean that companies could be taxed in a country if a deal is prepared or negotiated within its borders, instead of the tax being levied where the deal is signed.

The proposals are expected to come into force by the end of the year- although they won’t have the force of law, they could be pushed out through changes to tax treaties.

PwC also say that the UK tax authorities are looking closely at the new rules.

Debbie Payne, Tax Director at PwC Channel Islands, said: “One thing to note is that the OECD plans to try to implement these changes across all (or most) of the tax treaties globally via a multi-lateral instrument soon after the paper is finalised in September 2015.

“While the feasibility and timeline for implementation of this multi-lateral instrument remains unclear, the revised rules are already changing tax authority behaviour.

“Where there is no treaty in place, which is the case for many jurisdictions where Channel Islands’ companies conduct business, the impact of these changes is likely to be felt soon and we anticipate an increasing number of challenges from tax authorities in this area.

“The UK Diverted Profits Tax already goes further than the OECD proposals so it remains to be seen how the UK will react to this.”