[UPDATE: The draft legislation to implement the UTPR was not included in the 2024 Finance Act. Further draft legislation to implement the UTPR is expected during 2024].
The UK released draft legislation for the Under-Taxed Profits Rule (UTPR) on July 18, 2023. This follows the enactment of the Income Inclusion Rule (IIR) and Qualified Domestic Top-Up Tax (QDMTT) elements of the GloBE rules on July 11, 2023.
Whilst the IIR and QDMTT will apply for accounting periods beginning on or after 31 December 2023, the date of commencement of the UTPR is not stated in the draft law, but will not be before accounting periods beginning before 31 December 2024.
The UK draft law includes a new Chapter 9A in the Finance (No. 2) Act, 2023 which provides for most of the new amendments to create the UTPR in domestic law.
A new Part 3 of Schedule 16 is also included to provide for the UTPR exclusion for MNE groups in the initial phase of their international activity.
The draft law reflects all of the main provisions of the UTPR in the OECD Model Rules. The UTPR includes some optional variations for domestic jurisdictions.
Key points to note about the UK UTPR are:
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