Given the mounting legislative activity anticipated throughout 2023, keeping up with the latest developments of Pillar Two is crucial for businesses and stakeholders worldwide. The month of July was particularly eventful, with significant advancements made on the global front.
The Organisation for Economic Co-operation and Development (OECD) released its second set of Administrative Guidance for Pillar Two on July 17, 2023. This guidance covered various topics including GloBE calculations’ currency conversion rules, tax credits, Substance-based Income Exclusion (SBIE), and the design of the Qualified Domestic Minimum Top-up Taxes (QDMTT).
> Read our latest article to get an overview of the key aspects covered in these OECD documents.
The OECD/G20 Inclusive Framework members also made substantial strides, releasing an Outcome Statement on July 12, which summarized deliverables addressing the remaining elements of the Two-Pillar Solution, including additional details on Pillar One Amounts A & B and the Subject-to-Tax Rule (STTR). The statement reassured a swift and coordinated action plan for the implementation of the Two-Pillar Solution.
On the national front, several countries made noteworthy advancements in their efforts to align with the Pillar Two framework:
- Bulgaria: The Bulgarian Ministry of Finance announced its plans to introduce a domestic top-up that aligns with the EU Directive 2022/2523, with the implementation date set for January 1, 2024.
- Germany: The German Ministry of Finance released a draft bill on July 10, with the goal of incorporating the EU Council Directive 2022/2523 into domestic law by December 31, 2023.
- Liechtenstein: On July 11, Liechtenstein’s government approved a draft bill introducing a supplementary tax in the form of a QDMTT, an Income Inclusion Rule (IIR), and an Undertaxed Payments rule (UTPR), with staggered implementation deadlines ranging from January 1, 2024, to January 1, 2025.
- United Kingdom: On July 18, the UK government introduced legislation to adopt the Undertaxed Profits Rule (UTPR) and other amendments ensuring that any top-up taxes not paid under other jurisdictions’ Pillar Two rules will be levied in the UK. Few days before, the UK Finance (No. 2) Act 2023 received Royal Assent, officially adopting the GloBE rules in the UK.
WTS Global, with its expansive network spanning over 100 countries, remains committed to providing a comprehensive overview of the Pillar Two implementation status in 72 countries.
Our tax experts diligently update this information on a monthly basis to offer the most current insights.
If you have specific inquiries regarding the Pillar Two rules and their implications for your business, we encourage you to reach out to our tax experts. We stand ready to assist you in navigating this intricate landscape.