Isle of Man Issues the Cessation Form for Pillar 2 Domestic Top-Up Tax

The Isle of Man has issued the domestic top-up tax (DTUT) Cessation Form (Form P4A – DTUT Cessation Form). 

Under Section 44(1) of the Global Minimum Tax (Pillar Two) Order 2024, prior to an Entity of a Pillar 2 registered group (or a group that is required to register):

(a) entering liquidation, dissolution or any other form of winding-up; or
(b) ceasing to be located in the Isle of Man,

the Domestic Filing Entity must notify the tax authority of the estimated DTUT liabilities for all relevant periods that will be allocated to the Entity in the relevant DTUT returns and the Entity must make payment on account of the estimated amounts. The cessation form must be submitted even if the amount of DTUT allocation to the entity is nil. 

Section 18 of the law applies specific rules for the allocation of the DTUT liability between entities. It provides that the allocation is generally based on Articles 5.2.4 and 5.2.5 of the OECD Model GloBE Rules, however in certain cases a Domestic Filing Entity may elect that the allocation of DTUT liability for the Fiscal Year be made in accordance with a special procedure. It is this amount that is required to be notified in the Cessation Form.

The notification must be made prior to the cessation event. Under Section 44(2), on receipt of the notification of the estimated DTUT liabilities the tax authority must issue charge notices for the notified amount. Section 44(7) then requires that payment is due no later than 30 days from the date of the charge notice.

Relevant periods are defined as:

(a) all Fiscal Years for which a DTUT return has not yet been submitted by the Domestic Filing Entity; and

(b) the period commencing on the day after the most recent completed Fiscal Year and ending with the date of cessation. 

Under Section 26 of the Order, a Qualifying MNE Group is required to ensure that one Domestic Constituent Entity is appointed as the Domestic Filing Entity. The Domestic Filing Entity is responsible for registering all other Domestic Constituent Entities, Domestic Joint Ventures and Domestic Joint Venture Subsidiaries of the Group. The appointment of the domestic filing entity must also be included on the Cessation Form. 

Details on the Cessation Form

The Cessation Form requires:

-Ceasing Entity Details

-MNE Group Details – UPE

-Domestic Filing Entity Details

-Relevant Periods and Estimated Liabilities

-Assumption of Liability (Optional)

-Agent Authority (Optional)

-Appointment of Domestic Filing Entity by the Ceasing Entity

-Declaration