On 24 January 2022 the OECD issued the stage 2 peer review report assessing Guernsey’s compliance with the minimum standard under Action 14 of the project on base erosion and profit shifting (BEPS). Action 14 is concerned with making tax dispute resolution mechanisms more effective. Countries that are members of the OECD’s Inclusive Framework are monitored by the peer review process to assess compliance with the minimum standard.

The peer review report notes that Guernsey has concluded more than 25 tax treaties and has established a mutual agreement procedure (MAP) programme. However. since 1 January 2016 Guernsey has not received any MAP requests from taxpayers. In the period from 2016 to 2020, one MAP case was submitted to a treaty partner in a case concerning Guernsey; but the other jurisdiction considered that the taxpayer’s objection was not justified, so did not begin negotiations with Guernsey’s competent authority.

The stage one peer review report had considered that Guernsey met almost all the requirements of the minimum standard under Action 14. The stage two peer review concludes that most of the remaining issues have been resolved.

Guernsey’s double tax treaties all contain a provision relating to the MAP, generally following paragraphs 1 to 3 of Article 25 of the OECD Model. However around 7% of Guernsey’s double tax treaties do not contain the equivalent of the second sentence of Article 25(1) of the OECD Model establishing a three-year time limit for filing a MAP request. Some of the tax treaties therefore need to be amended to comply with the minimum standard.

Guernsey has signed the multilateral instrument (MLI) to include treaty related BEPS provisions in its bilateral treaties; and deposited its instrument of ratification on 12 February 2019. The MLI entered into force in relation to Guernsey on 1 June 2019 and can therefore be used to amend some of the tax treaties.

For treaties that will not be modified using the MLI, Guernsey intends to update these treaties through bilateral negotiations. Guernsey has however reported that one treaty partner has declined to renegotiate the relevant tax treaty.

The report notes that Guernsey has not set up a bilateral APA programme.

The report considers that Guernsey in principle fulfils the requirements of the BEPS action 14 minimum standard in relation to access to the MAP, although it had not received any MAP requests in the period since 1 January 2016. A documented bilateral consultation process has been established.