The following is a summary of the updates to BDO’s Pillar Two Tracker that were made during the period April-August. Please review the tracker for details of the updates.
- Australia: On 4 July 2024, the government introduced three bills into parliament that would implement the Pillar Two rules into Australian law. The legislation is expected to be finalised soon. The Australian Taxation Office announced on 31 July that it is setting up a special purpose working group to support consultation on how to implement the Pillar Two global and domestic minimum tax for MNE businesses.
- Austria: The Tax Amendment Act 2024, which became effective on 20 July 2024, revises the Minimum Tax Law to incorporate the OECD administrative guidance released in December 2023.
- Bahamas: The prime minister announced that the qualified domestic top-up tax for in-scope Pillar Two MNEs operating within the Bahamas will not be introduced until fiscal year 2025-2026.
- Barbados: The Corporation Top-Up Tax (Amendment) Bill 2024, published in the official gazette on 24 May, introduces a QDMTT that will apply for fiscal years starting on or after 1 January 2024.
- Belgium: On 21 May, the tax authorities released guidance relating to the Pillar Two notification requirement, with the designated form required to be filed by 13 July 2024. The tax authorities subsequently announced an extension of the notification deadline to 16 September 2024 for groups that do not intend to make advance payments of the minimum tax. A Royal Decree dated 7 July 2024 and that will apply as from 1 September contains information on how companies can make advance payments of the minimum tax (see the article in this issue).
- Canada: On 19 June 2024, the bill implementing the global minimum tax rules into Canadian law received Royal Assent, so that the bill is now enacted. The legislation includes an IIR and domestic minimum top-up tax that is intended to be a QDMTT that would apply to fiscal years of qualifying MNE groups starting on or after 31 December 2023. A UTPR is expected to be added later.
- Cyprus: Draft Pillar Two legislation has been released and on 24 July 2024, the government formally consented to the safe harbours and the OECD administrative guidance.
- Czech Republic: On 26 April 2024, the government published a draft bill that would amend the legislation transposing the EU global minimum tax directive into domestic law (as published in the official gazette on 29 December 2023 and that became effective on 1 January 2024). The draft would incorporate the OECD administrative guidance into Czech legislation. It still has to be approved by both chambers of parliament, signed by the president and published in the official gazette.
- Denmark: Legislation that applies as from 1 July 2024 incorporates the OECD administrative guidelines on the global minimum taxation rules into the Danish Minimum Taxation Act.
- Estonia: A law published on 2 May transposes the EU global minimum taxation directive into Estonian law. The law is effective as from 12 May. Estonia has elected to delay application of the IIR and UTPR until 2030 based on article 50 of the directive.
- European Union: The European Commission sent a reasoned opinion to six EU member states—Cyprus, Latvia, Lithuania, Poland, Portugal and Spain—for failing to notify the Commission of the measures for the transposition into national law of the Pillar Two directive. EU member states were required to transpose the directive into their national laws by 31 December 2023; some countries have now enacted legislation so the proceedings will not go forward (see the tax alert dated 28 May 2024).
- Germany: The Ministry of Finance has published a draft version of the Pillar Two minimum tax return form.
- Gibraltar: The government expects to have draft legislation that would implement a QDMTT in September 2024, with enactment taking place before the end of 2024.
- Greece: The legislation implementing the EU global minimum tax directive (and aligned with the OECD model rules) was published in the official gazette on 4 April 2024. The legislation includes an IIR and UTPR and Greece has opted to adopt a QDMTT.
- Guernsey: The Policy & Resources Committee will be releasing a policy letter proposing the introduction of an IIR and QDMTT to provide for a 15% effective tax rate in line with the joint statement issued with Jersey and Isle of Man on 19 May 2023 announcing they reached agreement on a joint approach to the Pillar Two framework.
- Hong Kong: A consultation was held on the Pillar Two rules (see article in this issue).
- India: The Revenue Secretary recently indicated that a panel has been set up to frame rules on Pillar Two. However, he also indicated that with respect to Pillar One, India will not sign on to the OECD's two-pillar initiative unless its concerns on withholding tax and dispute resolution are addressed. The Institute of Chartered Accountants announced on 29 July that changes have been made to Accounting Standard (AS) 22, “Accounting for Taxes on Income,” to reflect the planned adoption of the Pillar Two tax.
- Ireland: A new manual on Pillar Two administrative procedures was released on 8 Aug and guidance issued on 15 May clarifies the IIR, UTPR and QDMTT and provides more details on the substance-based income inclusion and safe harbour rules.
- Isle of Man: The government intends to introduce a QDMTT that would apply to fiscal years starting on or after 1 January 2025.
- Israel: The Minister of Finance indicated on 29 July 2024 that the government is working on a QDMTT that would apply as from 2026. There are no plans to adopt an IIR or UTPR at this time.
- Italy: A ministerial decree dated 1 July 2024 contains implementing rules on the domestic minimum top-up tax. Another decree dated 20 May 2024 implements the OECD safe harbours and administrative guidance into Italian law.
- Japan: The 2024 Tax Reform Laws and Regulations include amendments to Japan’s global minimum taxation rules to incorporate the OECD administrative guidance on the GloBE rules and the GloBE information return. Changes to the rules were published on 12 April 2024 to add a tax return for the global minimum tax and on 26 April, the tax authorities released explanatory notes on the global minimum tax.
- Jersey: The government intends to introduce an IIR and a standalone multinational corporate income tax (MCIT) that would operate alongside Jersey’s existing corporate income tax regime. The MCIT would be aligned with the OECD GloBE model rules. There currently are no plans for a UTPR. Draft legislation is expected to be released over the summer with the new rules applying to fiscal years starting on or after 1 January 2025.
- Korea (ROK): The 2024 Tax Law Amendment proposal includes changes to the GloBE rules as implemented in Korea. Proposed changes address methodologies for determining consolidated revenue, reversals of deferred tax liability accruals, allocating the UTPR top-up tax amount to constituent entities, determining the status of a flow-through entity as tax transparent entity or a reverse hybrid and transitional filing deadlines.
- Kenya: The finance bill for 2024 included a provision for implementing a 15% minimum top-up tax in alignment with the OECD Pillar Two rules, but due to widespread protests against certain proposed rate hikes, the bill has been withdrawn.
- Liechtenstein: An ordinance on the application of the domestic GloBE law entered into force on 29 March 2024 following publication in the official gazette. The ordinance provides details on filing the GloBE tax and information returns, as well as clarifications.
- Lithuania: The law transposing the EU minimum taxation directive into domestic law is effective as from 1 July. On 10 June, the tax authorities released guidance on the procedures for making the required notifications under the rules.
- Luxembourg: A Grand-Ducal regulation adopted on 24 July 2024 sets out the rules relating to functional currency, tax credits and qualified holdings for applying the Minimum Taxation Law.
- Malaysia: One of the recent clarifications in the FAQs is that Zakat is not considered a “covered tax” for purposes of the GloBE rules.
New Zealand: The draft legislation that implements the Pillar Two rules was passed on 27 March 2024. The IIR and UTPR will become effective as from 1 January 2025 and the domestic IIR will apply as from 1 January 2026. - Poland: A consultation was held on the draft bill implementing the EU minimum taxation directive into domestic law. The draft includes the introduction of an IIR and UTPR and Poland has opted to adopt a QDMTT. It also includes safe harbours. If adopted, the rules would apply as from 1 January 2025.
- Portugal: The Minister of Finance announced on 10 July 2024 that the government is expected to approve a project bill that transposes the EU global minimum taxation directive into domestic law following a public consultation that ran through 31 July.
- Puerto Rico: The legislative session ended on 30 June 2024 without the passage of the proposed global minimum tax measures.
- Singapore: A consultation is being held on draft legislation that would introduce a global minimum tax in Singapore. The proposed Multinational Enterprise (Minimum Tax) Bill and accompanying subsidiary legislation would introduce an IIR and domestic top-up tax (DTT), as previously announced in the 2024 Budget Statement on 16 February 2024. The IIR/DTT would apply for fiscal years starting on or after 1 January 2025. A UTPR will be considered at a later stage.
- Slovak Republic: A draft bill submitted for consultation would revise the law transposing the EU minimum global taxation directive into Slovak law to incorporate the OECD’s administrative guidance issued during 2023. If approved, the draft bill is expected to apply as from 31 December 2024.
- Spain: The Council of Ministers approved the draft legislation to transpose the EU global minimum taxation directive into domestic law on 4 June, following a public consultation, and the draft was then sent to the legislative chambers.
- Sweden: A public consultation was held from 19 March-20 May 2024 on rules that would be added to the domestic measures on Pillar Two. The proposed additions to the law would address the treatment of artificial arrangements in the calculation of the temporary simplification rule, the deferred application of the supplementary rule and a new currency rule, as well as changes to other domestic legislation. If adopted, the new measures would apply as from 1 January 2025.
- Turkey: Turkey has enacted legislation implementing the OECD Pillar Two global minimum tax and a domestic minimum tax. Law 7524, published in the official gazette on 2 August 2024, was presented to parliament on 15 July 2024 and approved on 28 July. The enacted measures include an IIR that applies to fiscal years starting from 1 January 2024; a UTPR that will apply to fiscal years starting from 1 January 2025; and a qualifying domestic minimum corporate tax that applies to fiscal years starting from 1 January 2024. The legislation also incorporates safe harbours (see the article in this issue).
- United Arab Emirates: The government has announced that enactment of the Pillar Two rules likely will be deferred to 2025.
- United Kingdom: The tax authorities launched a consultation on 29 July 2024 on an anti-arbitrage rule that would prevent large MNEs from exploiting differences between tax and accounting rules to allow groups to qualify for the transitional country-by-country reporting safe harbour where they would otherwise not have qualified. Guidance published on 20 May 2024 explains how to register for Pillar Two top-up taxes. The tax authorities have also updated guidance on how to prepare for the multinational top-up tax and the domestic top-up tax.