Tax revenue from big companies projected to double

Officials are expecting to collect almost double the revenue than previously projected from new taxes on big companies.

Deputy Charles Parkinson, treasury lead at the States of Guernsey, said it expected to receive about £79m from Pillar Two tax revenue rather than £40m.

Pillar Two, which came into force in 2025, was designed to ensure the largest multinational companies paid at least 15% tax on profits, in line with OECD global tax reforms.

Parkinson said the higher than expected revenue provided "breathing space" and could mean the start date for wider reforms for tax could move from 2028 to the following year or later if approved.

The committee's revised baseline revenue estimate is £93m, although that has been discounted to £79m to account for uncertainty.

A number of deputies said they believed the projected increased revenues meant there was no need to back the tax package proposed by Policy & Resources (P&R) at this week's States meeting and pressed for the committee to withdraw it.

Deputy Parkinson said in response: "I see clouds on the horizon but a responsible States will deal with the threats and make provision to strengthen our finances accordingly."

The package includes a 3% goods and services tax (GST), higher taxes on companies, lower rates of income tax, social security contribution allowances, the reintroduction of motor tax and higher income tax allowances, which officials said could raise about £36m a year.

Parkinson stressed the need to back P&R's tax package.

"Nothing has fundamentally changed, we just have a bit more breathing space," he said.

P&R has said the receipts from Pillar Two taxes were probably at their peak during the first two to three years, so could not be relied on in future as the committee expected businesses to restructure and adapt.

Only very large multinational groups are affected by Pillar Two, broadly those with annual revenues of €750m (£641m) or more in at least two of the previous four years.

Smaller Guernsey businesses are not affected.

Parkinson said there were about 1,200 companies within the scope for Pillar Two taxes.

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