UK: Public consultation on implementation of Pillar Two

HMT seeks input on the UK implementation and administration of the model rules for domestic implementation of Pillar Two

Implementation and administration of the model rules for domestic implementation

HM Treasury (HMT) today opened a public consultation on the implementation in the UK of Pillar Two of the OECD/G20 Inclusive Framework’s proposed solution to the tax challenges arising from digitalisation of the economy. The rules under Pillar Two would establish a global minimum tax of 15% for multinational enterprises with a turnover of at least €750 million, effective from 2023. 

HMT specifically seeks input on the UK implementation and administration of the model rules for domestic implementation of Pillar Two released by the OECD on 21 December 2021, as well as on a series of wider implementation questions.

HMT states in the consultation document [PDF 542 KB] that it anticipates that the implementing domestic legislation relating to the Income Inclusion Rule would be included in Finance Bill 2022-23 and would have effect from 1 April 2023. HMT also invites views on the UK implementation of the Undertaxed Profits Rule (UTPR) and on introducing a domestic minimum tax in the UK to complement Pillar Two, as well as any wider reforms to existing UK base erosion and profit shifting (BEPS) measures. However, any implementing domestic legislation relating to the UTPR or a domestic minimum tax would be introduced from 1 April 2024, at the earliest.

Comments are due 4 April 2022, and HMT expects to publish draft legislation in summer 2022.

 

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