South Korea to Apply a QDMTT from January 1, 2026
August 6, 2025
South Koreas 2025 Tax Reform Proposal (announced on July 31, 2025), provides that a QDMTT will be applied from January 1, 2026.
Once the top-up tax for the jurisdiction has been calculated, it is then allocated to the constituent entities in the jurisdiction that have net Pillar Two GloBE income (ie not entities that have Pillar Two GloBE losses) so that the charging provisions (ie the income inclusion rule or under-taxed payments rule) can correctly apply.
Note, that if all of the constituent entities in the jurisdiction are wholly owned and the UPE is applying an income inclusion rule, the allocation amongst constituent entities wouldn’t be required given the UPE would simply account for the top-up tax.
Article 5.2.4 of the OECD Model Rules provide that the allocation is based on each relevant constituent entity’s share of the total net Pillar Two GloBE income of the jurisdiction.
Example
In jurisdiction X:
Company A has net Pillar Two GloBE income of 5 million
Company B has net Pillar Two GloBE income of 10 million
Company C has net Pillar Two GloBE income of 20 million
Company D has a net Pillar Two GloBE loss of 5 million
Total jurisdictional top-up tax is 5 million. This is allocated as follows:
Company A = 5 million * 5/35 = 714,286
Company B = 5 million * 10/35 =1,428,571
Company C = 5 million * 20/35 =2,857,143
Company D = 0
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.
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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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