
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.
If the investment entity is treated as tax transparent in the owner’s jurisdiction anyway, then for tax purposes the income of transparent entities is taxed on the underlying owners. However, for accounting purposes, these entities would generally have their own financial accounts.
Given the GloBE rules rely on financial accounting information, specific additional rules are required to correctly allocate the income of transparent entities in a way that reflects most domestic tax treatment.
If special rules weren’t in place and the tax transparent entity was treated as having GloBE income and covered taxes under the standard GloBE rules, its ETR would often be zero and top-up tax would be due.
The purpose of this is again to try and align the GloBE rules with typical domestic tax treatment.
Investment funds are frequently tax-neutral entities under domestic law, with jurisdictions essentially looking to put investors into the fund in the same position for tax purposes as if they had made a direct investment.
Key amendments to the general GloBE rules are:
• Firstly, the financial accounting net income or loss of a transparent entity or reverse hybrid is reduced by any amounts due to owners that aren’t members of the MNE group.
This is necessary as the GloBE ETR of the group members won’t include income or taxes paid by non-group members.
• Secondly, if the transparent entity or reverse hybrid carries our business through a PE, this needs to be deducted from the accounting income of the transparent entity or reverse hybrid, given that permanent establishments (PEs) are treated as separate constituent entities for GloBE purposes.
• Finally, any remaining amount of the financial accounting income or loss is allocated to the owners if the entity is a transparent entity (based on their ownership interest).
This can flow up the chain if there are a number of transparent owners.
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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