OECD Pillar Two implementation Status
Let’s share your choice of country’s status of OECD Pillar Two implementation. Please select one country and/or select category in G20 (see below) and EU member countries. PwC’s Pillar Two Country Tracker (see below) provides the status of Pillar Two implementation in different countries and regions. Please provide one resource (link for news/articles/video) and write a short summary. Please do not use the same resource as another student. It is first-come-first serve.
Here is an example. Korea enacts new global minimum tax rules to align with OECD BEPS 2.0 Pillar Two: https://www.ey.com/en_gl/tax-alerts/korea-enacts-new-global-minimum-tax-rules-to-align-with-oecd-bep Links to an external site.
PwC’s Pillar Two Country Tracker Online: https://www.pwc.com/gx/en/services/tax/pillar-two-readiness/country-tracker.html Links to an external site.
G20: https://www.dfat.gov.au/trade/organisations/g20 Links to an external site.
What is Pillar Two? Under an OECD Inclusive Framework, more than 140 countries agreed to enact a two-pillar solution to address the challenges arising from the digitalization of the economy. Pillar Two introduces a global minimum Effective Tax Rate (ETR) via a system where multinational groups with consolidated revenue over €750m are subject to a minimum ETR of 15% on income arising in low-tax jurisdictions. https://www.pwc.com/gx/en/services/tax/pillar-two-readiness.html
When does Pillar Two come into effect? The OECD has recommended that the Pillar Two rules become effective in 2024, with the exception of the Undertaxed Profits Rule (UTPR) which is recommended to become effective in 2025. The EU Member States formally adopted the Minimum Tax Directive on December 15, 2022 and Member States shall transpose the Directive into their domestic law by December 31, 2023. Many other countries are working on their domestic rules to implement Pillar Two. Nevertheless, many multinationals already are subject to Pillar Two since the transition rules capture certain transactions occurring on or after November 30, 2021. https://www.pwc.com/gx/en/services/tax/pillar-two-readiness.html
Sample Solution
I choose to focus on the United Kingdom, as it is one of the most advanced countries in the world in terms of Pillar Two implementation.
Resource:
- UK passes Finance (No.2) Act 2023 introducing OECD Pillar Two measures: https://globaltaxnews.ey.com/news/2023-1243-uk-passes-finance-no2-act-2023-introducing-oecd-pillar-two-measures
Summary:
The United Kingdom has implemented Pillar Two through the Finance (No.2) Act 2023, which was enacted on 11 July 2023. The Act introduces two new taxes: the Multinational Top-up Tax (MTUT) and the Domestic Top-up Tax (DTUT).
Full Answer Section
The MTUT applies to multinational enterprises (MNEs) with global turnover of over €750 million. The MTUT is a top-up tax that is designed to ensure that MNEs pay a minimum effective tax rate (ETR) of 15% on their global income. The DTUT applies to UK companies that are not subject to the MTUT. The DTUT is also a top-up tax, but it is designed to ensure that UK companies pay a minimum ETR of 15% on their UK income. Both the MTUT and the DTUT apply for accounting periods beginning on or after 31 December 2023. The UK government has also introduced a number of other measures to support the implementation of Pillar Two, including:- A new Undermine Tax Agreement (UTA) with the United States, which will help to ensure that the MTUT and the DTUT are applied in a coordinated manner.
- A new GloBE Rules Disclosure Guidance, which provides guidance to businesses on how to comply with the new Pillar Two disclosure requirements.