| Status | Enacted |
| Law | On March 31, 2025, the amendment law, Cabinet Order and Ministerial Ordinance to implement the UTPR and QDMTT in Japan from April 1, 2026 were published in the Official Gazette. On February 4, 2025, Japan submitted the draft tax reform bill for 2025 to Parliament. This includes a QDMTT and UTPR from April 1, 2026. On December 20, 2024, Japan announced in its 2025 Tax Reform that the UTPR and a QDMTT will be applied from April 1, 2026. On April 26, 2024, the Japanese National Tax Agency issued detailed explanatory notes on the application of Japan’s Pillar Two law/ordinance. On April 12, 2024, the “Ministerial Ordinance to Partially Amend the Enforcement Regulations of the Corporation Tax Law” was published in the Official Gazette. This includes tax return forms (in Japanese) for reporting top-up tax under Japan’s Income Inclusion Rule. The top up forms are included in Appendix 20 of the Enforcement Regulations to the Corporation Tax Law, and can be viewed at: Top-up tax forms. Bill for the Partial Revision of the Income Tax Act of February 6, 2023 (Approved by Parliament on March 28, 2023) and published in the Official Gazette on Friday, March 31, as Act No. 3/2023. On June 16, 2023, a Cabinet Order to Partially Amend the Enforcement Order of the Corporation Tax Law was published in the Official Gazette. On June 30, 2023, Japan’s Ministry of Finance issued Ministry of Finance Ordinance No. 47 of 2023 Amending the Enforcement Regulations of the Corporation Tax Act. On September 29, 2023, the National Tax Agency published the “Partial Revision of the Basic Circular on Corporate Tax” which provides some administrative guidance on various aspects of Japan’s GloBE law. On October 20, 2023, the Japanese Ministry of Finance released its technical explanation of the Japanese Global Minimum Tax Laws and Regulations. On December 25, 2023, Japan’s National Tax Agency issued Frequently Asked Questions on the Japanese Income Inclusion Rule. |
| Effective Date | Accounting Periods Beginning On or After April 1, 2024. |
| IIR | April 1, 2024 |
| UTPR | April 1, 2026 |
| QDMTT | April 1, 2026 |
| Filing Deadlines | Standard. |
| Safe Harbours | Transitional CbC Safe Harbour, QDMTT Safe Harbour, NMCE Simplified Calculations |
On June 30, 2025, Japan issued its updated GIR to reflect the OECD GIR changes in January 2025.
On March 31, 2025, the amendment laws to implement the UTPR and QDMTT in Japan from April 1, 2026 were published in the Official Gazette.
On February 4, 2025, Japan submitted the draft tax reform bill for 2025 to Parliament. This includes a QDMTT and UTPR from April 1, 2026.
On January 28, 2025. the National Tax Agency revised the “Q&A on the Global Minimum Tax” for determining whether laws and regulations relating to the QDMTT Safe Harbour meet the requirements of the QDMTT accounting standard and consistency standard.
On December 20, 2024, Japan announced in its 2025 Tax Reform that the UTPR and a QDMTT will be applied from April 1, 2026.
On April 26, 2024, the Japanese National Tax Agency issued detailed explanatory notes on the application of Japan’s Pillar Two law/ordinance.
On April 12, 2024, the “Ministerial Ordinance to Partially Amend the Enforcement Regulations of the Corporation Tax Law” was published in the Official Gazette. This includes tax return forms (in Japanese) for reporting top-up tax under Japan’s Income Inclusion Rule. The top up forms are included in Appendix 20 of the Enforcement Regulations to the Corporation Tax Law, and can be viewed at: Top-up tax forms.
On December 25, 2023, Japan’s National Tax Agency issued Frequently Asked Questions on the Japanese Income Inclusion Rule to apply from April 1, 2024.
On October 20, 2023, the Japanese Ministry of Finance released its technical explanation of the Japanese Global Minimum Tax Laws and Regulations.
On March 28, 2023, Japan enacted a domestic law to give effect to the Pillar Two GloBE rules from April 1, 2024.
On June 30, 2023, Japan’s Ministry of Finance issued Ministry of Finance Ordinance No. 47 of 2023 Amending the Enforcement Regulations of the Corporation Tax Act.
On June 16, 2023, a Cabinet Order to Partially Amend the Enforcement Order of the Corporation Tax Law was published in the Official Gazette.
On September 29, 2023, the National Tax Agency published the “Partial Revision of the Basic Circular on Corporate Tax” which provides some administrative guidance on various aspects of Japan’s GloBE law.
On February 3 and 6, 2023, the Ministry of Finance published the “Bill for the Partial Revision of the Income Tax Act”. This includes the implementation of the Pillar Two GloBE rules from April 2024.
The GloBE Act provides for the application of the GloBE rules in Japan from April 1, 2024.
It is based on the OECD Model GloBE rules and incorporates all of the key provisions for the application of an Income Inclusion Rule (IIR).
The new global minimum tax applies to MNE groups with consolidated turnover above 750 million euros as expressed in Japanese currency (to be converted in accordance with a government ordinance, under Article 82(4) of the GloBE Act).
All of the key provisions in the Globe Rules will apply (jurisdictional blending, substance-based income exclusion (including the transitional rates), the de-minimis rule, rules for intermediate parent companies, partially-owned parent companies, minority owned companies and investment companies, filing rules etc).
However, the GloBE Act left a number of the crucial details outstanding as they were to be included in future Cabinet Orders.
Therefore, the calculation of GloBE income (Article 82 of the Act) and Adjusted Covered Taxes were to be stipulated by Cabinet Order. These are both crucial to the calculation of the GloBE jurisdictional effective tax rate (ETR).
Cabinet Order No. 208 issued on June 16, 2023 addresses this. The use of financial accounting net profit or loss is included in Article 155-16/17. Article 155-18 then contains most of the GloBE income amendments. This includes:
-Net Taxes Expense (Article 155-18(2) of the Cabinet Order)
-Excluded Dividends Article (155-18(2) of the Cabinet Order)
-Excluded Equity Gain or Loss (Article 155-18(2) of the Cabinet Order)
-Included Revaluation Method Gain or Loss (Article 155-18(2) of the Cabinet Order)
-Gain or loss from disposition of assets and liabilities excluded (Article 155-18(2) of the Cabinet Order)
-Asymmetric Foreign Currency Gains or Losses (Article 155-18(2) of the Cabinet Order)
-Policy Disallowed Expenses (Article 155-18(2) of the Cabinet Order)
-Prior Period Errors and Changes in Accounting Principles (Article 155-18(2) of the Cabinet Order)
-Accrued Pension Expense (Article 155-18(2) of the Cabinet Order)
-Stock-Based Compensation Election (Article 155-23 of the Cabinet Order)
-ALP Requirement (Article 155-16(3)/(4) of the Cabinet Order)
-Qualified Refundable Tax Credits (Article 155-18(2) of the Cabinet Order)
-Realisation Basis Election (Article 155-29 of the Cabinet Order)
-Capital Gain Carry-Back Election (Article 155-24 of the Cabinet Order)
-Intra-Group Financing Arrangements (Article 155-18(2) of the Cabinet Order + Ministerial Ordinance)
-Consolidation Election (Article 155-20 of the Cabinet Order)
-Insurance Returns to Policyholders (Article 155-20 of the Cabinet Order)
-Additional Tier 1 Capital (Article 155-20 of the Cabinet Order)
-Debt Release Election (Article 155-28 of the Cabinet Order)
-Portfolio Shareholdings Election (Article 155-27 of the Cabinet Order)
-Forex Hedge Election (Article 155-26 of the Cabinet Order)
The September 2023 Amended Circular, provides additional guidance on a number of aspects of the GloBE rules including:
-Definition of total income (New Article 18-1-7)
-Companies to which the equity method is applied (New Article 18-1-14)
-Calculation of net profit or loss after tax (New Article 18-1-24)
-When the accounting standards of constituent entities differ from the ultimate – parent company financial accounting standards (New Article 18-1-26)
-Arm’s length price (New Article 18-1-33)
-Tax equivalent to corporate income tax (New Article 18-1-64)
-Scope of employees of constituent entities, (New Article 18-2-1)
-Examples of tangible fixed assets and natural resources (New Article 18-2-2)
-Non-application of de-minimis rules to stateless companies. (New Article 18-2-10)
Administrative Guidance
Aspects of the First Set of OECD Administrative Guidance included in the GloBE Act include:
-Rebasing monetary thresholds in the GloBE Rules (Article 1.1)
-The meaning of “ancillary” for Non-Profit Organisations (Article 1.6)
-The foreign exchange hedge election (Article 2.2)
-Excluded dividends – asymmetric treatment of dividends and distributions (Article 2.3)
-The debt release election (Article 2.4)
-Accrued pension expenses (Article 2.5)
-Excess negative tax carry-forward guidance (Article 2.7)
-Substitute loss carry-forwards (Article 2.8)
-Equity investment inclusion election (Article 2.9)
-Application of Article 7.6 to Insurance Investment Entities (Article 3.1)
-Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity (Article 3.2)
-Provisions on restricted tier one capital for insurance companies (Article 3.3)
-The portfolio shareholding election (Article 3.5)
-The application of the tax transparency election to mutual insurance companies (Article 3.6)
-Applicability of Article 9.1.3 to transactions similar to asset transfers (Article 4.2)
-Asset carrying value and deferred taxes under 9.1.3 (Article 4.3).
The 2024 Tax Reform included various aspects of the Second and Third Set of OECD Administrative Guidance, including for Transferable Tax Credits, Safe Harbour Rules and foreign employees/assets for the purposes of the Substance-Based Income Exclusion.
Article 38-32 of the 2025 amended Enforcement Regulations implements Section 1.2 of the June 2024 OECD Administrative Guidance relating to calculating deferred tax liabilities, including using the LIFO basis and aggregate deferred tax liabilities.
Safe Harbour and Penalty Relief Guidance
Detailed guidance on Safe Harbours are excluded from the GloBE Act.
However, Article 14 of the Supplementary Provisions of the Act provides for transitional measures to be established for the top-up tax calculation.
In line with the OECD Transitional CbCR Safe Harbour, it provides for a Safe Harbour where an MNE Group has a Simplified ETR that is equal to or greater than the transition rate in a jurisdiction for the Fiscal Year (the ETR test).
The Simplified ETR is simply the income tax expense in the MNE Group’s financial statements divided by the profit before income tax in the MNE Group’s CbC Report.
This does not require any GloBE adjustments (eg the allocation of CFC or Main Entity taxes). The transition rate is 15% for Fiscal Years beginning in 2023 and 2024, 16% for Fiscal Years beginning in 2025; and 17% for Fiscal Years beginning in 2026.
The June 2023 Cabinet Order provides further details on the Transitional CbCR Safe Harbour which aligns with the OECD Safe Harbours and Penalty Relief Guidance.
When determining whether the Transitional CbCR Safe Harbour is applicable, one of the tests requires the determination of the Substance-Based Income Exclusion (SBIE) under the GloBE rules. The September 2023 Amended Circular confirms that the transitional SBIE rates are to be used.
The 2024 Tax Reform amended the Transitional CbCR Safe Harbour rules to include the Hybrid Arbitrage and Purchase Price Adjustments from the December 2023 OECD Administrative Guidance.
The 2024 Tax Reform also made amendments to the Corporate Tax Law to include the OECD QDMTT Safe Harbour and the NMCE Simplified Calculations Safe Harbour.
ELECTIONS
Elections in the OECD Model Rules
-Transitional CbC Safe Harbour Election – Article 14, Transitional Measures of the Law
-Excluded Entity Election –Tax Authority Guidance
-Consolidation Election – Article 155-20 of the Cabinet Order
-Capital Gain Carry-Back Election – Article 155-24 of the Cabinet Order
-Realisation Basis Election – 155-29 of the Cabinet Order
-Stock-Based Compensation Election – Article 155-23 of the Cabinet Order
-Tax Transparency Election – Article 155-31 of the Cabinet Order
-Taxable Distribution Method Election – 155-41 of the Cabinet Order
-Distribution Tax Regime Election – Article 155-42 of the Cabinet Order
-Prior Year Adjustment Election – Article 155-34(4) of the Cabinet Order
-Substance-Based Income Exclusion Election – Article 82-2-8 of the Law and the Tax Authority Guidance
-GloBE Loss Election – Article 38-40 of the Ministerial Ordinance
-Unclaimed Accrual Election – Article 38-28 of the Ministerial Ordinance
-Deemed Disposal of Assets Election – Article 155-29 of the Cabinet Order
Elections in the Administrative Guidance
-Debt Release Election – Article 155-28 of the Cabinet Order
-Portfolio Shareholdings Election – Article 155-27 of the Cabinet Order
-Equity Investment Inclusion Election – Confirmed in Tax Authority Guidance
-Forex Hedge Election – Article 155-26 of the Cabinet Order
-Excess Negative Tax Carry-Forward Election – Confirmed in Tax Authority Guidance
New Elections
None.
DEVIATIONS FROM THE OECD MODEL RULES/EU GLOBAL MINIMUM TAX DIRECTIVE
Japan’s GloBE Act only applies the undertaxed profits rule (UTPR) from April 1, 2026.
Adjusted covered taxes in Article 155(35)(2) of the Cabinet Order also aligns with the GloBE rules but does not include provisions for Blended CFC regimes included in Article 2.10 of the OECD Administrative Guidance.
When determining whether the CbCR Safe Harbour is applicable, one of the tests requires the determination of the SBIE under the GloBE rules. The September 2023 Amended Circular confirms that the transitional SBIE rates are to be used.
The First Set of OECD Administrative Guidance (issued in February 2023) is generally reflected in the Japan law and regulations. However, the Second/Third Set of OECD Administrative Guidance is partially reflected.
The October 2023 Tax Authority Guidance confirms that the GloBE Act is subject to the general anti-avoidance rules in Japan.
DOMESTIC MINIMUM TAX
General
The Law to Partially Amend the Income Tax Act (published in the Official Gazette on March 31, 2025), includes a domestic minimum tax (‘DMTT’), intended to be a qualified domestic minimum top-up tax (QDMTT) from April 1, 2026.
QDMTT Design Features
New Articles 82-18 – 82-26 of the Corporation Tax Act provide for the domestic minimum top-up tax (intended to be a QDMTT) from April 1, 2026. Article 18-19(2) of the Corporation Tax Act applies the standard GloBE rules for the DMTT calculation subject to some specific amendments in the law and further amendments that are provided in the amended Enforcement Order.
Push-Down Taxes
Tax paid or incurred by a Constituent Entity-owner under a CFC Tax Regime that is pushed down to a domestic Constituent Entity in the GloBE Rules must be excluded, as provided in the OECD Administrative Guidance. This is included in Section 155-61 of the amended Enforcement Order.
This preserves Japan’s primary right to tax income accruing to a Japanese member entity which is also a CFC. If there were no statutory derogation from the general GloBE rules for the calculation of the domestic minimum tax, and the CFC tax paid by the controlling company abroad were included in the included taxes of the Japanese CFC, the effective tax rate would be increased. Therefore, excluding the CFC tax from the Japanse CFCs covered taxes allows Japan to tax low-taxed income at a higher rate than would be the case under an IIR.
Section 155-61 of the amended Enforcement Order also prevents the pushdown of tax to hybrids, PEs and for taxes on distributions (except for Japanese withholding tax on dividends).
Ownership Interests
Section 155-70 of the amended Enforcement Order provides that top-up Tax that is subject to the QDMTT is based on the whole amount of the Jurisdictional Top-up Tax calculated, irrespective of the Ownership Interests held in the Constituent Entities located in the QDMTT jurisdiction by any Parent Entity of the MNE Group.
Accounting Standard
The standard method of determining excess profit in Section 155-41 of the amended Enforcement Order applies. As such the accounting standard of the UPE is used as default however. the accounting standard used in the preparation of the financial statements of the constituent entity can be used for QDMTT purposes
De Minimis Exemption
Article 82-19(8) applies the de minimis rule for QDMTT purposes (ie the QDMTT is deemed to be zero) if:
-the average Pillar Two GloBE revenue of the jurisdiction for the current and the two preceding fiscal years is less than EUR 10 million; and
-the average net Pillar Two GloBE income or loss of the jurisdiction for the current and the two preceding fiscal years is a loss or is less than EUR 1 million.
The UTPR exclusion for MNEs in their initial phase of international activity does not need to be included in a QDMTT, however, it can be included. The Second Set of OECD Administrative Guidance provides jurisdictions with three options regarding the temporary UTPR exclusion in their QDMTT legislation.
Option one allows the jurisdiction not to adopt it.
Option two allows the jurisdiction to adopt it but limits it to cases where no Parent Entity is required to apply a Qualified Income Inclusion Rule with respect to Constituent Entities of an MNE Group located in the QDMTT jurisdiction.
Option three allows the jurisdiction to adopt it without any limitations. (Note, if a jurisdiction opts for Option three, for the purposes of the QDMTT Safe Harbour the Switch-Over Rule would apply).
Japan applies Option two in a new Article 82-19(14) of the law.
The transitional provisions to the Law applies the Transitional CbCR Safe Harbour for QDMTT purposes (for financial years beginning between April 1, 2026 and December 31, 2026 (and ending by June 30, 2028)).
Registration
Not provided in the GloBE Act.
Filing
GloBE Information Returns (GIRs) must be filed within one year and three months from the day following the end of each fiscal year under Article 150-3 of the GloBE Act. This is increased to one year and six months for the first fiscal year an MNE is subject to the GloBE Rules in Japan under Article 150-3(6)) of the GloBE Act.
If there are multiple domestic corporations, one representative company can provide it.
However, if there is a mechanism by which the tax authority of the MNE’s UPE shares the information with the Japanese tax authorities (ie by an automatic exchange of information agreement), the local filing requirement may be exempted.
In-scope MNEs are also required to submit a GloBE Tax Return in Japan. The October 2023 Tax Authority Guidance applies mandatory electronic filing to:
-Corporations whose amount of stated capital or amount of capital contribution at the beginning of the subject fiscal year exceeds 100 million yen;
-Mutual companies;
-Investment corporations; and
-Special purpose company’s
A new Article 82-14 of the Corporation Tax Act requires the submission of a UTPR tax return within 15 months from the end of the fiscal year (increased to 18 months in the transitional year). The UTPR tax return must be accompanied by the consolidated financial statements of the ultimate parent entity of the MNE group for the relevant fiscal year and other documents prescribed by an Ordinance of the Ministry of Finance.
A new Article 82-22 requires the submission of a QDMTT tax return (for entities subject to with an amount of QDMTT payable) within 15 months of the end of the fiscal year (18 months in the transitional year).
This will include the following information:
(i) GloBE income for QDMTT purposes
(ii) The amount of QDMTT payable
(iii) The basis for calculating these amounts as provided by an Ordinance of the Ministry of Finance.
The QDMTT tax return must be accompanied by financial statements for the entity which are the basis for the preparation of consolidated financial statements of the ultimate parent entity of the MNE group, as well as other documents prescribed by an Ordinance of the Ministry of Finance.
Payment
Articles 82-9, 82-17 and 82-25 of the Corporation Tax Act provides that the payment deadline for top-up tax under the IIR, UTPR and QDMTT is the same as the filing deadline for the relevant return.
Penalties
The GloBE Act does not provide detailed penalty provisions. In particular it refers to Articles 159-162 of the Corporation Tax Law, which may be utilised to provide for penalties.
However, the October 2023 Tax Authority Guidance provides that if a taxpayer fails to file the GIR by the due date without justifiable reason, the representative, agent, employee, or agent of the corporation may be liable to imprisonment for not more than five years or a fine of not more than 5 million yen.
On April 12, 2024, the “Ministerial Ordinance to Partially Amend the Enforcement Regulations of the Corporation Tax Law” was published in the Official Gazette. This includes tax return forms (in Japanese) for reporting top-up tax under Japan’s Income Inclusion Rule. The top up forms are included in Appendix 20 of the Enforcement Regulations to the Corporation Tax Law, and can be viewed at: Top-up tax forms.
On June 30, 2025, Japan issued the updated GIR.
Other forms include:
Double filing relief notification
Exclusion for GIR filing
Appendix – Exclusion for GIR filing
Japan has launched its Multinational Enterprise Information Reporting Portal for filing Pillar 2 returns.
Forms are filed via the Japanese E-Tax System in the Multinational Enterprise Information Reporting Portal. Returns related to global minimum tax for the fiscal year starting after April 1, 2024, are accepted from September 16, 2025. Information is submitted via a CSV file or XML file.
| Japan | |||
|---|---|---|---|
| Effective Date: | Accounting periods beginning on or after April 1, 2024 | ||
| Section/Article | |||
| First Set of OECD Administrative Guidance | |||
| 1.1 | Rebasing monetary thresholds in the GloBE Rules | 38-3 Ordinance |
|
| 1.2 | Deemed consolidation test | 2024 Amendments, Art 82 – Excludes State Entities |
|
| 1.3 | Consolidated deferred tax amounts | – | |
| 1.4 | Sovereign wealth funds and the definition of Ultimate Parent Entity | 2024 Amendments, Art 82 – Excludes State Entities |
|
| 1.5 | Clarifying the definition of ‘Excluded Entity’ | – | |
| 1.6 | Meaning of ancillary for Non-Profit Organisations | 38-10 Ordinance |
|
| 2.1 | Intra-group transactions accounted at cost | – | |
| 2.2 | Excluded Equity Gains or Loss and hedges of investments in foreign operations | 38-21 Ordinance |
|
| 2.3 | Excluded Dividends- Asymmetric treatment of dividends and distributions | Guidance |
|
| 2.4 | Debt release Election | 38-21 Ordinance |
|
| 2.5 | Accrued Pension Expenses | Guidance | |
| 2.6 | Covered Taxes on deemed distributions | – | |
| 2.7 | Excess Negative Tax Carry-forward guidance | Guidance |
|
| 2.8 | Substitute Loss carry forwards | Guidance |
|
| 2.9 | Equity Gain or loss inclusion election | Guidance |
|
| 2.9 | Qualified Ownership Interest/Flow through entity | 2024 Tax reform -Basic Provision 18-1-80-3 | |
| 2.1 | Allocation of taxes arising under a Blended CFC Tax Regimes | – |
|
| 3.1 | Application of Taxable Distribution Method Election to Insurance Investment Entities | Guidance | |
| 3.2 | Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity | Guidance |
|
| 3.3 | Restricted Tier 1 Capital | 38-19 Ordinance |
|
| 3.4 | Liabilities related to Excluded Dividends and Excluded Equity Gain or Loss from securities held on behalf of policyholders | Guidance | |
| 3.5 | Simplification for Short-term Portfolio Shareholdings | 155-17 Cabinet Order |
|
| 3.6 | Application of Tax transparency election to Mutual insurance companies | 155-17 Cabinet Order |
|
| 4.1 | Deferred tax assets with respect to tax credits under Article 9.1.1 | Guidance | |
| 4.2 | Applicability of Article 9.1.3 to transactions similar to asset transfers | Guidance | |
| 4.3 | Asset carrying value and deferred taxes under 9.1.3 | Guidance | |
| Second Set of OECD Administrative Guidance | – | ||
| 1 | Currency conversion rules | – | |
| 2 | MTTCs | 2024 Tax Reform – Basic Provision 18-1-46-4 | |
| 3 | SBIE Rules | ||
| – Foreign rules | 2024 Tax Reform – Basic Regulation 18-2-1-2 | ||
| Stock-based compensation election | – | ||
| Leases | – |
||
| – Impairment losses inc in tangible asset value | – | ||
| 4.1 | QDMTT Safe Harbour | 2024 tax reform- 82-2(6) | |
| 4.2 | UTPR Safe Harbour | – |
|
| Third Set of OECD Administrative Guidance | |||
| 1 | Transitional CbCR – Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) | 2024 Tax Reform Amendment of the Corporate Tax Basic Circular | |
| 2.2.1 | Transitional CbCR – JVs | Tax Q&A doc | |
| 2.3.1 | Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting | Tax Q&A doc | |
| 2.3.2 | Transitional CbCR – Using different accounting standards | Tax Q&A doc | |
| 2.3.3 | Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Mismatches | ||
| 2.3.4 | Transitional CbCR – MNEs not required to file CbC Reports | Tax Q&A doc | |
| 2.3.5 | Transitional CbCR – Qualified Financial Statements for PEs | Tax Q&A doc | |
| 2.4.2 | Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities | ||
| 2.6 | Transitional CbCR – Treatment of hybrid arbitrage arrangements | 2024 Tax Reform | |
| 3.1 | Identifying Consolidated Revenue | ||
| 3.2 | Mismatch between Fiscal Years of the UPE and another Constituent Entity | ||
| 3.3 | Mismatch between Fiscal Year and Tax Year of Constituent Entity | ||
| 4.2.1 | Blended CFCs -multiple GloBE Jurisdictional ETRs | ||
| 4.2.2 | Blended CFCs – not required to calculate an ETR | ||
| 4.2.3 | Blended CFCs – income of non-GloBE Entities | ||
| 5.3 | 30 June 2026 Filing deadline | 2024 Tax reform art 22 amend | |
| 6 | NMCE Simplified Calcs | 2024 tax reform- 82-2(8) | |
| Fourth Set of OECD Administrative Guidance | |||
| 1.2.1 | Aggregate DTL Category basis | Article 38-32 of the 2025 amended Enforcement Regulations | |
| 1.2.1 | Exclusion of certain types of GL accounts and separate tracking | Article 38-32 of the 2025 amended Enforcement Regulations | |
| 1.2.1 | Exclusion of GL accounts that generate standalone DTAs | Article 38-32 of the 2025 amended Enforcement Regulations | |
| 1.2.1 | Exclusion of swinging accounts and separate tracking | Article 38-32 of the 2025 amended Enforcement Regulations | |
| 1.2.2 | FIFO/LIFO Basis | Article 38-32 of the 2025 amended Enforcement Regulations | |
| 1.2.3 | Aggregation of Short-term DTLs | Article 38-32 of the 2025 amended Enforcement Regulations | |
| 1.2.2 | Reversal of DTLs that accrued before the Transition Year | Article 38-32 of the 2025 amended Enforcement Regulations | |
| 1.2.2 | 5 year unclaimed accrual election | Article 38-32 of the 2025 amended Enforcement Regulations | |
| 2.1.2 | Recalculated deferred tax where GloBE carrying value differs from accounting carrying value | ||
| 2.1.2 | GloBE and accounting carrying values and the Transition Rules | ||
| 2.1.2 | Additional provisions for Intragroup transactions accounted for at cost | ||
| 2.1.2 | Exclusion of GloBE carrying value from SBIE | ||
| 3.1.3 | General rules for allocating cross-border, current taxes under a cross-crediting corporate tax system: 4 Steps | ||
| 3.1.3 | Specific rules for foreign PEs/CFCs, Hybrids/rev hybrids with domestic source income | ||
| 3.1.3 | Cross-crediting between Permanent Establishments and distributions from foreign subsidiaries | ||
| 4.1 | Extension of the Substitute Loss Carry-forward DTA to PEs, hybrids and rev hybrids | ||
| 4.2 | Allocation of deferred tax expenses and benefits from a Parent Entity to a CFC, PE Hybrid or Rev Hybrid: 5 step process | Regulations for Enforcement of the Corporation Tax Law, Article 38-55 | |
| 4.2.2 | Five-Year Election to exclude the allocation of all deferred tax expenses and benefits to CFCs, PEs, Hybrids and Rev Hybrids | Regulations for Enforcement of the Corporation Tax Law, Article 38-56 | |
| 4.2.3 | Exclusion of deferred tax assets or liabilities arising under a Blended CFC regime from transition rules | ||
| 5.2.2 | Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity | ||
| 5.3.2 | Non-group owners: Partially owned Flow-through Entities | ||
| 5.3.5 | Non-group owners: Indirect minority ownership | ||
| 5.4.2 | Taxes allocated to a flow-through entity | ||
| 5.5.2 | Hybrid entities – Taxes pushed down include indirect owners | ||
| 5.5.4 | Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system | ||
| 5.6.2 | Extension of taxes pushed down to include Reverse Hybrids | ||
| 6.1.4 | Option to exclude a Securitization Entity from scope of QDMTT | ||
| 6.1.4 | Option to not impose top-up tax liabilities on SPVs used in securitization transactions | ||
| 6.1.4 | Amendments to the Switch-Off rule | ||
| 6.1.4 | New definition: Securitization Entity | ||
| 6.1.4 | New definition: Securitization Arrangement | ||
| January 2025 OECD Administrtive Guidance | |||
| 1 | Articles 8.1.4 and 8.1.5 | ||
| 1 | Amendments to CbCR Safe Harbour for 9.1 | ||
| 1 | Amendments to QDMTT Safe Harbour for 9.1 | ||
| 1 | Article 9.1 of the GloBE Rules | ||
| 1 | Central Record of Legislation with Transitional Qualified Status |
| Note | Japan | |
|---|---|---|
| QDMTT?(Enacted/Draft) | Is there a QDMTT in the Legislation? | Yes |
| Effective Date: | April 1, 2026 | |
| Administrative Guidance/Safe Harbour Guidance? | Are the provisions of the OECD Administrative Guidance and Safe Harbour Guidance reflected in the current legislation? | Yes |
| Separate/Transposed QDMTT | Is the QDMTT a Separate QDMTT or a Transposition of the GloBE Rules (with Amendments) | Separate |
| Domestic Groups | A QDMTT can also apply to purely domestic groups. | No |
| Scope Definitions | The definitions of Ultimate Parent Entity, MNE Group, and Constituent Entity correspond with the definitions in the GloBE Rules. | Yes |
| Income and covered taxes of Constituent Entities | The QDMTT must compute the tax liability for the jurisdiction by taking into account the income and covered taxes of Constituent Entities under the GloBE Rules. | Yes |
| Separate ETRs | A QDMTT must determine a separate ETR and Top-up Tax amount for MOCEs, Joint Ventures and JV Subsidiaries. | Yes |
| Charging | A QDMTT must impose a Top-up Tax on one or more domestic Constituent Entities on the Excess Profits of all domestic Constituent Entities, including the domestic Parent Entity. | Yes |
| Enforceability | The legal liability for the domestic top-up tax needs to be enforceable against at least one Constituent Entity in the jurisdiction. | Yes |
| Different Accounting Standard? – Optional | Is the use of a local accounting standard optional? | No |
| Different Accounting Standard? – Mandatory | Is the AG2 guidance followed? | No |
| Different Accounting Standard? – Default GloBE rules | Do the general GloBE rules apply for the QDMTT accounting standard? | Yes |
| Require 100% ownership? | The QDMTT )can require 100% ownership | No |
| Differences to GloBE Rules: tighter restriction is consistent with local tax rules | The QDMTT can be more restrictive than the GloBE Rules where the tighter restriction is consistent with local tax rules. | No |
| Differences to GloBE Rules: Not relevant to in the context of its domestic tax system | The QDMTT can exclude adjustments that are not relevant to in the context of its domestic tax system. | No |
| Income/Loss of a PE | The QDMTT must exclude the income or loss of a foreign Permanent Establishment from the income or loss of the Main Entity. | Yes |
| Tax Transparency | A QDMTT must include certain tax transparent provisions. | Yes |
| Adjusted Covered Taxes Consistency | The range of taxes included in Covered Taxes needs to be the same or narrower, as under the GloBE rules. | Yes |
| GloBE Loss Election? | Not Required in QDMTT | Yes |
| No Pushdown to CFC or PE | A QDMTT must exclude: (1) tax paid or incurred by a Constituent Entity-owner under a CFC Tax Regime that is pushed down to a domestic Constituent Entity in the GloBE Rules and (2) tax paid or incurred by a Main Entity that is allocated to a PE in the jurisdiction. | Yes |
| Exclude tax allocated to Hybrids | Second AG Guidance | Yes |
| Exclude allocated net basis tax on dividends (except WHT) | Second AG Guidance | Yes |
| UPE that is a Flow-Through Entity | Second AG Guidance | Yes |
| UPE subject to Deductible Dividend Regime | Second AG Guidance | Yes |
| Eligible Distribution Tax Systems | Second AG Guidance | Yes |
| ETR Computation for Investment Entities | Second AG Guidance | Yes |
| Investment Entity Tax Transparency Election | Second AG Guidance | Yes |
| Taxable Distribution Method Election | Second AG Guidance | Yes |
| Multi-Parented MNE Groups | Second AG Guidance | Yes |
| Additional Top-Up Tax/Excess Negative Tax Expense | A QDMTT needs to have provisions for additional top-up tax where there is no Net GloBE Income and the Adjusted Covered are less than zero and less than the Expected Adjusted Covered Taxes. Amount. Excess Negative Tax Carry-forward rules also need to be in place. | Yes |
| Modified Top-Up Tax Formula | The QDMTT top-up tax formula needs to be modified as the GloBE Rules subtract tax paid under a QDMTT from the current GloBE Top-up Tax. | Yes |
| Same Approach As GloBE Rules | A QDMTT must require that top-up tax is taken into account by the relevant Constituent Entity at the same time and in the same manner as under the GloBE Rules (eg it can’t be carried forward). | Yes |
| SBIE Included? | Not Required in QDMTT | Yes |
| SBIE Rates same as GloBE? | Not Required in QDMTT | Yes |
| De Minimis Rule Included? | Not Required in QDMTT | Yes |
| Restructuring Rules? | A QDMTT needs to include restructuring rules as provided in the GloBE rules to the extent necessary to conform to the tax reorganization rules in the jurisdiction. | Yes |
| Safe Harbours? | A QDMTT needs to contain GloBE safe harbours. | Yes |
| Deferred Tax Transition Rule? | A QDMTT must include the deferred tax starting point under Article 9.1.1 of the Model Rules. | Yes |
| SBIE Transitional Rates? | Not Required in QDMTT | Yes |
| Initial Phase of International Activity Exemption | Not Required in QDMTT | Yes |
| Elections? | Where the GloBE Rules permit an election, a QDMTT must generally also provide for the election and require the MNE Group to make the same election under the QDMTT as is made under the GloBE Rules. | Yes |
| Deferred Tax transition: First time or refreshing rule? | Second AG | No |
| New transition year – amend tax attributes? | Second AG | No |
| Currency provisions? | Second AG | No |
| DTL Recapture rules – Aggregate DTL Categories | Fourth AG, 1.2.8 | Yes |
| DTL Recapture rules Unclaimed Accrual Five-Year Election | Fourth AG, 1.2.8 | Yes |
| Reverse Hybrid Pushdown | Fourth AG, 5.6.2 | No |
| Securitization Entities – A QDMTT may also exclude a Securitisation Entity from its scope | Fourth AG, 6.1.4 | No |
| Securitization Entities – A jurisdiction may allocate the QDMTT liability for any QDMTT top-up tax to another Constituent Entity (if any) that is located in the jurisdiction | Fourth AG, 6.1.4 | No |
| Note |
| Japan | ||
|---|---|---|
| Effective Date: | Accounting periods beginning on or after April 1, 2024 | |
| Section/Article | ||
| Safe Harbour & Penalty Relief Guidance | De Minimis Test | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Simplified ETR Test | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Routine Profits Test | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Simplified Covered Tax defn (inc exclusion of uncertain tax positions) | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Simplified ETR defn | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Transition Period | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Transition Rate | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Defn of Qualified Financial Statements | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Special Rule for Joint Ventures | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Special Rule for Tax Neutral UPEs | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Special Rules for Investment Entities and their Constituent Entity-owners | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Special Rule for Net Unrealised Fair Value Loss | Transitional Rule 14 |
| Safe Harbour & Penalty Relief Guidance | Exclusions | Transitional Rule 14 |
| December 2023 OECD Administrative Guidance | ||
| 1 | Transitional CbCR – Purchase Accounting Adjustments(consistent reporting condition, goodwill impairment adjustment) | 2024 Tax Reform Amendment of the Corporate Tax Basic Circular |
| 2.2.1 | Transitional CbCR – JVs | Tax Q&A doc |
| 2.3.1 | Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting | Tax Q&A doc |
| 2.3.2 | Transitional CbCR – Using different accounting standards | Tax Q&A doc |
| 2.3.3 | Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Mismatches | No |
| 2.3.4 | Transitional CbCR – MNEs not required to file CbC Reports | Tax Q&A doc |
| 2.3.5 | Transitional CbCR – Qualified Financial Statements for PEs | Tax Q&A doc |
| 2.4.2 | Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities | No |
| 2.6 | Transitional CbCR – Treatment of hybrid arbitrage arrangements | 2024 Tax Reform |
| January 2025 OECD Administrtive Guidance | ||
| Amendments to CbCR Safe Harbour for 9.1 |
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