UK Issues a List of Jurisdictions that Have Qualified IIRs and DMTTs for Pillar 2

On March 31, 2025, the UK approved the Multinational Top-up Tax (Pillar Two Territories, Qualifying Domestic Top-up Taxes and Accredited Qualifying Domestic Top-up Taxes) Regulations 2025. This provides a list of jurisdictions that have qualified status for the purposes of the income inclusion rule (IIR) and domestic minimum tax (DMTT), including the QDMTT Safe Harbour. 

Background

Section 51 of Finance Act 2025 included a provision which enables foreign QDMTTs to have qualifying status for the QDMTT Safe Harbour.

This was implemented as it was unlikely the OECD would publish lists of taxes which have passed its peer review process in time for the UK to issue regulations before the end of 2024.

It stated that where no regulation has been issued, a QDMTT qualifies for the QDMTT Safe Harbour if it complies with the OECD guidance, or that it is reasonable to expect it to do so.

This was treated as having come into force on November 7, 2024 and will be treated as being substantially enacted prior to the end of 2024 for the purposes of UK GAAP and IFRS. This would allow MNE groups with accounting periods ending on December 31 to make tax provisions in their 2024 accounts taking account of the QDMTT Safe Harbour.

When the GloBE Information Return/domestic tax returns are submitted for accounting periods ending on December 31, 2024 regulations would have been issued in the UK. MNE groups would then submit their tax returns on the basis of the position outlined in the regulations.

Section 51 of Finance Act 2025 also included similar provisions so that where no UK regulation has been issued:

-A territory will be a Pillar Two territory if it has a Qualified IIR, or if it would be reasonable to conclude that a tax is likely to be a Qualified IIR after it has been peer reviewed.

-A qualifying domestic top-up tax is a tax which is listed as a QDMTT by the OECD, or can reasonably be expected to be so listed following the conclusion of the OECDs peer review process.

The new regulation provides a definitive statement of the qualifying territories applicable to groups whose accounting periods end on or after the date the regulations are laid (March 31, 2025). The position for accounting periods ending before this are based on the treatment under Section 51 of Finance Act 2025 as outlined above. 

The list follows the same approach as the list of jurisdictions with Transitional Qualified Status published by the OECD on January 15, 2025 with no differences. As such it does not yet include a number of jurisdictions that have IIRs and DMTTs in place (and which were enacted late in 2024 or early 2025).  

Jurisdictions that Qualify (and Don’t Qualify) Currently for Transitional Qualified Status

The table below indicates:

-which jurisdictions have an IIR or DMTT;

-the effective date of implementation;

-whether the IIR and DMTT qualify for Qualified Status under the UK Regulation;

-if there is a QDMTT, whether that qualifies for the QDMTT Safe Harbour.