On October 10, 2024, Ireland published its 2024 Finance Bill. On November 12, 2024, the President enacted the Finance Act 2024. In the Act, a number of amendments are implemented to the Global Minimum Tax provisions. This includes:
– Provisions to implement the December 2023 OECD Administrative Guidance
– Provisions to implement the June 2024 OECD Administrative Guidance
– Other Amendments
December 2023 OECD Administrative Guidance
The S.I. No. 675/2023 – Taxes Consolidation Act 1997 (Section 111B(3)) Order 2023 transposes the amendments to the Transitional CbCR Safe Harbour in the December 2023 OECD Administrative Guidance.
However, to leave no doubt over the application, the Finance Act 2024 specifically legislates for a number of aspects to ensure they are included in the primary legislation. This includes:
– Transitional CbCR – Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) (Article 1)
– Transitional CbCR – MNEs not required to file CbC Reports (Article 2.3.4)
– Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities (Article 2.4.2)
– Transitional CbCR – Treatment of hybrid arbitrage arrangements (Article 2.6)
Whilst the S.I. No. 675/2023 – Taxes Consolidation Act 1997 (Section 111B(3)) Order 2023 transposes the December 2023 OECD Administrative Guidance into domestic law (which includes the NMCE Simplified Calculations Safe Harbour), the Finance Act 2024 specifically legislates for this in a new Section 111AKA in the law.
These amendments are effective from December 31, 2023 (with the PPA adjustments applying to impairments of goodwill related to transactions entered into after November 30, 2021 and hybrid arbitrage arrangements applying to arrangements entered into after December 15, 2022)
June 2024 OECD Administrative Guidance
The Finance Act 2024 includes a number of amendments and additions arising from the June 2024 OECD Administrative Guidance. These have varying commencement dates. The table below shows an overview of the provisions.
| Provision | Law | Commencement |
|---|---|---|
| Aggregate Deferred Tax Liabilities Category basis (Article 1.2.1) | Finance Act 2024 – new Art 111X(11) | 31/12/2024 |
| Exclusion of certain types of General Ledger accounts and separate tracking (Article 1.2.1) | Finance Act 2024 – new Art 111X-(12) | 31/12/2024 |
| Exclusion of General Ledger accounts that generate standalone Deferred Tax Assets (Article 1.2.1) | Finance Act 2024 – new Art 111X(13) | 31/12/2024 |
| Exclusion of swinging accounts and separate tracking (Article 1.2.1) | Finance Act 2024 – new Art 111X(13) | 31/12/2024 |
| FIFO/LIFO Basis (Article 1.2.2) | Finance Act 2024 – new Art 111X(14)/15) | 31/12/2024 |
| Recalculated deferred tax where GloBE carrying value differs from accounting carrying value (Article 2.1.2) | Finance Act 2024 – new Art 111X(16) | 31/12/2024 |
| Five-Year Election to exclude the allocation of all deferred tax expenses and benefits to CFCs, PEs, Hybrids and Rev Hybrids (Article 4.2.2) | Finance Act 2024 – new Art 111Z(9a) | 31/12/2024 |
| Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity (Article 5.2.2) | Finance Act 2024 – new Art 111A(5A) | 31/12/2024 |
| Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system (Article 5.5.3) | Finance Act 2024 – 111A definition | 31/12/2023 |
| Extension of taxes pushed down to include Reverse Hybrids (Article 5.6.2) | Finance Act 2024 – 111Z(5) | 31/12/2024 |
| Option to not impose top-up tax liabilities on SPVs used in securitization transactions (Article 6.1.4) | Finance Act 2024 – new Art 111A(8)(d)/Art AAC(4) | 31/12/2023 |
| Amendments to the Switch-Off rule (Article 6.1.4) | Finance Act 2024 – new Art 111AI(4)(d) | 31/12/2024 |
| New definition: Securitization Entity (Article 6.1.4) | Finance Act 2024 – new Art 111A(II) | 31/12/2023 |
| New definition: Securitization Arrangement (Article 6.1.4) | Finance Act 2024 – new Art 111A(II) | 31/12/2023 |
Other
Other amendments in the Finance Act 2024, that affect the GMT law include:
– Amendments to section 111X regarding the order of utilisation when determining the total deferred tax adjustment amount for a fiscal year in relation to a loss deferred tax asset (confirming the Last-In-First-Out (LIFO) basis applies);
– Amendments to section 111AAB to provide that standalone investment undertakings, as defined in section 246 of the TCA 1997, are not chargeable to domestic top-up tax;
– Clarification that the registration date for IIR/UTPR and QDMTT purposes is December 31, 2025, where the registration date would be earlier than December 31, 2025.
For detailed information on the application of the GloBE Rules in Ireland, based on the latest 2024 Finance Act, see our:
OECD Administrative Guidance: Domestic Implementation Matrix
Transitional CbCR Safe Harbour: Domestic Implementation Matrix
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