Guernsey is expecting to collect almost twice as much tax from some of the world’s biggest companies as previously forecast.
Pillar Two receipts are now expected to bring in around £79m a year, compared with the £40m the States had previously budgeted for, according to the island’s Treasury Lead.
In fact, the tax could raise as much as £93m, but Policy and Resources (P&R) has knocked it down to £79m to account for “uncertainty”.
However P&R says we still need GST and the rest of its tax reforms.
‘More breathing space’
Deputy Charles Parkinson, Treasury Lead, said the extra money could give the States more time before introducing wider tax reforms.
He said the start date could potentially move from 2028 to 2029 or later, if deputies approved the tax package.
But he rejected suggestions that the higher Pillar Two receipts meant GST was no longer needed.
“Nothing has fundamentally changed, we just have a bit more breathing space,” he said.
P&R has warned that Pillar Two income cannot simply be relied on indefinitely.
The committee said it expects receipts to be at their highest during the first two or three years, before affected businesses restructure and adapt.
Who pays Pillar Two?
Pillar Two came into force in 2025 as part of international efforts to ensure the world’s biggest multinational companies pay at least 15% tax on their profits.
It applies to firms that made more than €750m (£641m) a year in at least two of the previous four years.
Smaller Guernsey businesses are not affected.
Deputy Parkinson said around 1,200 companies in Guernsey fall within the scope of the tax.
P&R’s proposed tax package includes a 3% GST, higher company taxes, changes to income tax and social security allowances, the return of motor tax and higher income tax allowances.
Officials have previously estimated the package would raise around £36m a year.
Several deputies have already argued that the higher Pillar Two receipts remove the need for the proposed tax rises, and have called on P&R to withdraw its package.
