
QDMTT: Legislative Tracker
Track the development and application of QDMTTs as they are implemented globally. The OECD Administrative Guidance provides significant flexibility as to their design.
On March 31, 2023, the Irish government issued a Feedback Statement on the Pillar Two Global Minimum Tax.
It includes draft legislation and outlines possible draft legislative approaches to key elements of the GloBE Rules. It is open for comments until May 8, 2023.
A second Feedback Statement is planned to be published in mid-2023, which will include more detailed draft legislation and will reflect the outcome of the consultation. The final draft legislation is planned to be included in the autumn 2023 Finance Bill.
In line with the EU Directive, the draft legislation applies an Income Inclusion Rule (IIR) from fiscal years commencing on or after 31 December 2023, and the Under-Taxed Profits Rule for fiscal years commencing on or after 31 December 2024.
As Ireland’s 12.5% trading rate of corporation tax is below the 15% global minimum rate, Ireland will also include a Qualified Domestic Minimum Top-Up Tax (QDMTT) to ensure it retains primary taxing rights. This is not included in the draft legislation, and the Feedback Statement outlines different approaches that could be taken.
Ireland has already made a number of changes to its tax incentives regimes to reflect the Pillar Two GloBE Rules, see: Irish 2022 Finance Bill Changes for Pillar Two
Unlike most other draft laws that have been published, the draft law includes many of the additional rules that have been published in the OECD Administrative Guidance.
For example:
The draft law addresses substitute loss carry forwards. This reflects Article 2.8 of the OECD Administrative Guidance that provides for the inclusion of deferred tax in the GloBE deferred tax adjustment amount for ‘Substitute Loss Carry Forwards’.
The draft law provides for the Carry-forward of Excess Negative Tax Expenses. As an alternative to incurring additional top-up tax when a domestic tax loss exceeds the GloBE loss, Article 2.7 of the OECD Administrative Guidance provides that an MNE can elect for the Excess Negative Tax Expense administrative procedure. The law implements these provisions.
The draft law applies specific provisions for Blended CFC Regimes (which reflects the OECD Administrative Guidance and includes a simplified formula to allocate CFC taxes in blended CFC regimes such as GILTI for fiscal years that begin on or before 31 December 2025 but not ending after 30 June 2027).
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Track the development and application of QDMTTs as they are implemented globally. The OECD Administrative Guidance provides significant flexibility as to their design.
Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Switzerland from January 1, 2024. Updated for the Second Draft Decree of May 24, 2023.
It was reported last week that the Vietnamese Ministry of Planning and Investment is working on designing tax incentives to take account of the upcoming application of Pillar Two.
Last week the Bahamian government released a Green Paper asking for feedback on four proposed strategies for the introduction of corporate income tax in the Bahamas, including a QDMTT.
Yesterday, Switzerland issued an updated Draft Decree for the Pillar Two Global Minimum Tax. This follows the previous Draft Decree that was subject to a public consultation.
Whilst both jurisdictions are opting for direct transposition of the OECD Model Rules, there is a key difference in how they are drafted.
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