EY and the Guernsey Revenue Service encourage businesses to prepare for tax compliance changes and audits

Delegates from Guernsey’s finance industry gathered at EY’s Tax briefing update at the Duke of Richmond Hotel to hear from leading industry professionals about the latest updates on Pillar Two; and FATCA and CRS compliance.

The session was led by David White, Partner and Head of Tax at EY in Guernsey, alongside EY’s Tax Director, Cristian Anton, a specialist in FATCA and CRS. They were joined by Nig Garland, Head of Policy (Deputy Director) at the Guernsey Revenue Service, and Steve Chandler from the Revenue Service AEOI team. Together, they shed light on the latest changes in corporate tax matters, updates to the Automatic Exchange of Information (AEOI)regimes and the practical implications for businesses in Guernsey.

The OECD Pillar Two regime seeks to implement a global minimum tax rate of 15%. As Guernsey’s Pillar Two legislation took effect from 1 January 2025, businesses should undertake an initial assessment to see if they fall within scope of these changes and determine next steps.

David explained: “Although many Guernsey entities will not be in scope, for those that are, Pillar Two represents a significant change in tax compliance and reporting on top of Guernsey’s zero-ten tax regime.”

Many multinational groups will already have undertaken an assessment of Pillar Two, so it is important for Guernsey businesses to connect with their group teams to determine what steps are needed locally. For groups that have yet to determine if they are affected by the Pillar Two legislation, it is important to take action now and perform the initial assessment, determine the impact on financial statement disclosures and work through data requirements.

“Pillar Two sits alongside Guernsey’s existing zero-ten corporate income tax regime but will involve registration and additional notifications and filings. If you are uncertain about how to proceed with next steps, we would strongly recommend seeking professional support with detailed assessments and planning to ensure compliance.”

In terms of FATCA and CRS reporting, these rules have been in place for many years and should now be ‘business as usual’. However, the reporting requirements are evolving, and there is now a greater expectation regarding the standard of compliance. With the Revenue Service set to perform more in-depth, on-site technical compliance reviews, businesses are advised to ensure they have all their policies and procedures in place, along with all the required FATCA and CRS supporting documentation ready for potential audit. Where issues or errors are identified, we recommend businesses make a voluntary disclosure to the Revenue Service in advance of any audit or enquiry.

Nig explained “As the implementation of FATCA and CRS has matured, there is an expectation that each jurisdiction’s programme of monitoring compliance will also evolve. As such, the Revenue Service will be adapting its approach to focus more heavily on comprehensive onsite audits, as the more targeted audits that were undertaken previously have served their purpose of enabling the Revenue Service to understand the risk landscape specific to Guernsey.”

Steve added: “With the imminent introduction of CRS 2.0 amendments and Crypto Asset Reporting Framework, it is vital that businesses keep informed of the requirements and ensure they are ready to report the additional information, for the first reporting by 30 June 2027.”

Businesses also need to consider amending their due diligence procedures to align with the new requirements of the upcoming CRS 2.0 amendments. The OECD has introduced significant changes to the CRS, which are set to take effect in Guernsey for reportable periods starting from 1 January 2026. These amendments aim to enhance the scope and effectiveness of the current CRS requirements and align with the new Crypto Asset Reporting Framework (CARF) to ensure that crypto transactions are also included moving forward.

Cristian concluded: “While many businesses are well aware of the FATCA and CRS requirements, it’s important to remember that the requirements are not static: they have continuously evolved throughout the years and will continue to do so. A full review and amendments to the onboarding and due diligence procedures are required to ensure you and your clients are ready for the amendments to the CRS framework as well as being ready for the enhanced Revenue Service audit activity.”

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