
South Korea to Apply a QDMTT from January 1, 2026
South Koreas 2025 Tax Reform Proposal (announced on July 31, 2025), provides that a QDMTT will be applied from January 1, 2026.
Importantly, unlike when determining the revenue for the purposes of the revenue threshold, consolidation adjustments that eliminate intra-group transactions are excluded.
The financial accounting net income or loss is based on the accounting standard used to prepare the consolidated financial statements.
Key Takeaways of the Financial Accounting Net Income or Loss
• There is no reduction in the financial accounting income or loss figure for any minority interest in the constituent entity held by other entities (this is instead taken into account when allocating any top-up tax). For more information, see Allocation of Top-Up Tax.
• Because the financial accounting income or loss figure is based on the profit and loss account, any amounts included in the Other Comprehensive Income section of the financial accounts are generally excluded. Other Comprehensive Income generally consists of items that impact the balance sheet but that aren’t reported in the profit and loss account.
This would include things like unrealized gains or losses on derivatives or retirement benefit plans and foreign currency translation adjustments.
• Although Other Comprehensive Income is generally excluded from the financial accounting income figure, revaluation method gains or losses that are included there are included.
• Consolidated financial accounts will have been prepared based on a materiality threshold. This threshold also applies to the Pillar Two GloBE income calculation.
• If the Constituent Entities’ financial accounts are prepared using an accounting standard different from the Ultimate Parent Entity (UPE) that prepares the consolidated accounts, Article 3.1.3 of the OECD Model Rules provides that another accounting standard may be used if:
o the financial accounts of the constituent entity are maintained based on that accounting standard;
o the information contained in the financial accounts is reliable; and
o permanent differences in excess of EUR 1 million arising from the application to transactions of a particular standard that differs from the UPE’s financial standard, conform to the UPEs accounting standard.
South Koreas 2025 Tax Reform Proposal (announced on July 31, 2025), provides that a QDMTT will be applied from January 1, 2026.
On July 24, 2025, the Luxembourg Government issued:
– a draft law to amend its Minimum Tax Law to provide for the January 2025 OECD Administrative Guidance and the EU DAC 9 GIR filing requirements: and
– a draft Regulation which includes the format of the GIR
On July 16, 2025, Kuwait updated its electronic registration portal to include Pillar 2 registration for in-scope groups.
The Pillar Two effective tax rate (ETR) calculation for investment entities is similar to the standard ETR calculation, however, there is an important twist in that the top-up tax is adjusted for minority interests. There is no adjustment for minority interests under the standard ETR calculation. In this article we look at the impact of this.
Foreign tax credits interact with the Pillar Two GloBE Rules in a number of ways. In this article we assess the key impact.
In most cases, a Qualifying Refundable Tax Credit will result in a higher Pillar Two effective tax rate than a non-qualifying tax credit. However, this is not always the case. We look at some examples in this article.
On July 9, 2025, ANAF Order 1.729/2025 was issued to nominate a single designated entity for QDMTT filing and payment purposes, if there are several constituent entities in Romania that are part of the same group.
On June 30, 2025, Japan issued its updated GloBE Information Return (GIR) to reflect the OECD GIR changes in January 2025.
The Executive Regulations were issued on June 29, 2025, in Ministerial Resolution No. 55 of 2025. The Regulations provide for the detailed rules for the application of the domestic minimum top-up tax from January 1, 2025.
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