Of key importance is that a domestic top-up tax that doesn’t qualify as a QDMTT would simply be treated as another covered tax.

This makes the tax less attractive and would mean an increased tax rate compared to if it was a QDMTT in order to fully eliminate any GloBE top-up tax after the substance-based income exclusion has been taken into account.

This is because the substance-based income exclusion is taken into account in the formula when
calculating excess profits.

To see an example of how this applies, see Qualified Domestic Minimum Top-Up Tax. 

Our interactive tool allows you to simulate the impact on the top-up tax liability depending on whether a domestic minimum tax is a QDMTT or not.