BDO Corporate Tax News

The following is a summary of the updates to BDO’s Pillar Two Tracker that were made during the period November 2024 – January 2025. Please review the tracker for details of the updates.

• Australia: The three bills that implement the Pillar Two rules into Australian legislation were passed by parliament and received royal assent on 10 December 2024, as a result of which the measures are enacted. On 23 December, the government published subordinate legislation that sets out how the global minimum tax will be applied. See article in this issue.
• Bahamas: The Domestic Minimum Top-Up Tax Bill applies retroactively as from 1 January 2024 to in-scope MNE groups with fiscal years starting in that year if an IIR or UTPR in another jurisdiction must be applied to each CE of the group in the Bahamas in that year. The DMTT is mandatory for all in-scope MNE groups for fiscal years that commence after 31 December 2024.
• Bahrain: The authorities released guidance on 16 January 2025 on the application of the DMTT and the Executive Regulations, including information on how the DMTT operates, revenue thresholds, exclusions, compliance rules and transition measures.
• Bermuda: Legislation published in the official gazette on 28 December 2023 and that applies as from 1 January 2025 introduced a corporate income tax and contains a 15% tax on Bermuda businesses that are part of MNE groups with annual revenue of EUR 750 million or more. Bermuda does not intend to introduce an IIR or a UTPR. The Corporate Entities (Miscellaneous) Amendment Act 2024, which was tabled on 6 December 2024, includes a definition of a CE and will require in-scope entities to declare their Bermuda CE status at the time of registration or incorporation and amends the requirements for annual returns, declarations and compliance certificates to include information on an entity's Bermuda CE status.
• Brazil: The law introducing an “additional social contribution on net profits” was published on 30 December 2024. The law is based on the QDMTT in the OECD GloBE rules and sets a 15% minimum ETR. The QDMTT applies for fiscal years starting on or after 1 January 2025 and operates as a supplement to the Social Contribution on Profits that would be levied on "excess profits," as defined. The law does not include an IIR or UTPR but it does require the Brazilian executive branch to submit a legislative proposal to the congress during the first half of fiscal year 2025 that would revise domestic law in order to introduce an IIR (but no UTPR).
• Curacao: The ordinance implementing the global minimum tax and an accompanying explanatory memorandum includes an IIR and a domestic top-up tax that apply to fiscal years starting on or after 1 January 2025.
• Cyprus: The House of Representatives approved the legislation that would implement the EU global minimum taxation directive into domestic law on 12 December 2024, but the legislation still must be published to become effective. The legislation follows the directive and includes provisions from the OECD administrative guidance. Once in effect, the IIR and QDMTT will apply as from 1 January 2024 and the UTPR will apply as from 1 January 2025.
• Denmark: A consultation launched on 3 February 2025 and that runs through 3 March includes measures that would implement the OECD's administrative guidelines from June 2024 and January 2025 into Denmark’s Pillar Two law.
• European Union: The Subcommittee on Tax Matters of the European Parliament (FISC subcommittee) hosted an exchange of views with the EU Commissioner responsible for taxation on 6 February 2025 where the parties discussed key priorities in taxation. The Commissioner reiterated that the EU remains committed to its obligations under the global minimum taxation initiative.
• Finland: Changes to the minimum tax law adopted on 19 December 2024 incorporate the 2023 OECD administrative guidance and the CbCR safe harbour, simplify the method for calculating the minimum tax and address the treatment of tax credits, etc.
• France: A decree published in the official gazette of 5 December 2024 introduces filing obligations for MNE groups subject to the GloBE rules and provides for the exchange of GloBE information with other jurisdictions. On 24 January 2025, the tax authorities released the form for in-scope entities to use for their annual reporting. In addition, based on France’s tax code, French CEs of an MNE group subject to the Pillar Two rules must include specific information in their annual corporate income tax return, including that the CE is part of a group, the identity of the UPE or designated filing entity and the jurisdiction of the UPE/filing entity.
• Germany: A revised draft bill on amendments to the domestic Pillar Two rules would change the language of the domestic rules, provide details on the application of the CbCR safe harbour and implement the OECD’s Jun 2024 administrative guidance.
• Gibraltar: The Global Minimum Tax Act 2024 was enacted on 23 December 2024. The legislation contains an IIR and a DMTT, the latter of which applies to domestic CEs and JVs, as well as domestic groups, as defined. There is no UTPR. The IIR applies for fiscal years starting on or after 31 December 2024 and the DMTT applies for fiscal years starting on or after 31 December 2023.
• Guernsey: The Income Tax (Approved International Agreements) (Implementation) (OECD Pillar Two GloBE Model Rules) Regulations, 2024 includes an IIR and a QDMTT that apply to fiscal years starting on or after 1 January 2025. The regulations incorporate the 2023 and 2024 OECD administrative guidance. Guernsey is not adopting a UTPR at this time.
• Hong Kong: A bill presented to the Legislative Council on 8 January 2025 would implement a global minimum tax and domestic minimum top-up tax under the Pillar Two GloBE rules. See article in this issue.
• Hungary: The tax authorities published a draft version of the GloBE registration forms for in-scope Hungarian entities to provide information about their top-up tax liability and their MNE group. The reporting obligation must be met within 12 months of the beginning of the fiscal year in which the MNE group becomes subject to the Pillar Two rules.
• Indonesia: In a press release issued on 16 January 2025, the Ministry of Finance announced that a regulation that implements the global minimum tax rules was issued on 31 December 2024 and applies for fiscal years starting on or after 1 January 2025. The regulation includes an IIR, a UTPR and a QMDTT. The IIR and QDMTT apply for fiscal years starting on or after 1 January 2025, with the UTPR applying a year later, i.e. for fiscal years starting on or after 1 January 2026. Further, the regulation introduces several safe harbours. See article in this issue.
• Ireland: On 17 December 2024, the tax authorities released an updated Tax and Duty Manual – Outbound Payments Defensive Measures, which confirms that a top-up tax under the Pillar Two rules is not subject to withholding tax under EU defensive measures for outbound payments.
• Isle of Man: The Global Minimum Tax (Pillar Two) Order 2024 was approved by the Tynwald on 21 November 2024, but the order still must receive royal assent before it becomes effective. The order includes a QDMTT (to be known as a domestic top-up tax) and an IIR (to be known as a multinational top-up tax), but no UTPR. The rules will apply to fiscal years starting on or after 1 January 2025.
• Italy: The tax authorities published more guidance on 31 December 2024 that addresses the treatment of existing deferred tax assets and liabilities when calculating the ETR for the application of the top-up tax in the transition year and a decree published on 30 December includes additional implementing rules on the top-up tax, in particular, clarifications and administrative guidance issued by the OECD.
• Japan: A tax reform package released on 20 December 2024 includes plans for introducing a UTPR and QDMTT, as well as amendments to Japan’s Pillar Two legislation. Draft legislation will be released in 2025, with the measures scheduled to apply for fiscal years beginning on or after 1 April 2026. Both the UTPR and QDMTT are expected to be in alignment with the OECD model rules. See article in this issue.
• Kenya: The Tax Laws (Amendment) Act 2024, which received the president’s assent on 11 December 2024, includes a provision for implementing a 15% domestic minimum top-up tax in alignment with the OECD Pillar Two rules. The measures are effective as from 27 December 2024, with the minimum top-up tax applying to fiscal years starting on or after 1 Jan 2025. The act does not include the OECD safe harbours or administrative guidance, but regulations are expected to be issued to address these items and to set out how the domestic top-up tax will apply and who is eligible.
• Kuwait: A law published on 30 December 2024 introduces a 15% DMTT on MNEs operating in Kuwait and other countries. Executive Regulations that will detail operation of the Pillar Two law will be issued within six months from the date of publication of the law. The law is effective for fiscal years starting on or after 1 January 2025 and ensures that in-scope MNEs pay a minimum tax rate of at least 15% on their profits. Kuwait has not legislated an IIR or UTPR. See article in this issue.
• Liechtenstein: Rules published on 13 December 2024 introduce a notification requirement for in-scope Liechtenstein entities requiring them to complete and submit a form developed by the tax authorities within six months after the end of the fiscal year. The notification requirement applies for fiscal years starting on or after 1 January 2024. All CEs of large domestic or MNE groups and excluded entities are covered by the notification requirement. In-scope Liechtenstein entities must register with the tax authorities by completing a questionnaire within six months after the end of the fiscal year. Penalties apply for noncompliance.
• Luxembourg: Legislation that applies to fiscal years starting on or after 31 December 2023 incorporates the 2023 OECD administrative guidance into Luxembourg law. A regulation that applies to tax years starting on or after 31 December 2024 contains new rules on the functional reporting currency for applying the Pillar Two legislation.
• Malaysia: Guidance that applies as from 1 January 2025 explains the implementation of the Pillar Two legislation and outlines the tax authorities’ interpretation and administration, including policies and procedures.
• Netherlands: A decree published on 23 December 2024 implements various parts of the 2023 OECD administrative guidance into Dutch law and applies retroactively from 31 December 2023.
• North Macedonia: A law published on 3 January 2025 introduces a minimum global profit tax that is aligned with the EU directive. The law applies for the fiscal year starting on 1 January 2024, except for the UTPR , which applies to fiscal years starting on or after 1 January 2025. The minimum tax law contains an IIR, UTPR and a domestic top-up tax.
• OECD: On 15 January 2025, the Inclusive Framework (IF) on BEPS released a compilation of qualified domestic rules and other tools to rationalize the coordinated administration of the global minimum tax, including an update to the standardized GloBE Information Return and a Multilateral Competent Authority Agreement to facilitate central filing and exchange of the return.
• Oman: A Royal Decree published in the official gazette on 5 January 2025 introduces a 15% domestic top- up tax on MNEs operating in Oman whose annual revenues exceed OMR 300 million. The law, which is aligned with the OECD GloBE rules, implements Pillar Two legislation in Oman effective 1 January 2025 but does not contain an IIR or a UTPR. The IIR and UTPR are in the form of a “Supplemental Tax.” The tax authorities will be issuing Executive Regulations and other guidance that will address calculation of the tax, safe harbours, procedures, etc.
• Poland: The President signed into law the bill transposing the EU minimum taxation directive into domestic law on 15 November 2024, with the law applying as from 1 January 2025. The legislation includes the introduction of an IIR and UTPR and Poland has opted to adopt a QDMTT. It also includes safe harbours.
• Portugal: The bill transposing the EU minimum taxation directive into domestic law was published on 4 November 2024, following promulgation by the president and parliamentary approval. The legislation includes and IIR, UTPR and QDMTT. The IIR and QDMTT apply for fiscal years starting on or after 31 December 2024 and the UTPR will apply for fiscal years starting on or after 31 December 2025.
• Puerto Rico: The government held an extraordinary legislative session on a draft minimum tax starting on 9 December 2024, but an agreement was not reached.
• Qatar: he tax authorities announced on 23 December 2024 that the Shura Council approved changes to the Income Tax Law that would introduce rules that are consistent with Pillar Two. The measures include an IIR, a UTPR and a QDMTT that would apply to in-scope MNE groups, as well as safe harbours. The IIR and QDMTT would apply for fiscal years starting on or after 31 December 2023 and the UTPR would apply to fiscal years starting on or after 31 December 2024. The proposed changes still must be endorsed by the head of state and be published in the official gazette to become effective.
• Singapore: The Ministry of Finance published an order on 31 December 2024 giving effect to two pieces of legislation published in November. Regulations on the rules were also published on 31 December, as was an e-tax guide of the tax authorities.
• Slovak Republic: On 17 December 2024, a draft bill that amends the domestic global minimum global taxation legislation to incorporate the OECD’s 2023 administrative guidance was published, with the changes applying as from 31 December 2024.
• South Africa: The Global Minimum Tax Act, which implements a global minimum tax in South Africa, was published on 24 December 2024 and applies retroactively as from 1 January 2024. The legislation includes an IIR and DMTT intended to be a QDMTT, but not a UTPR. The OECD safe harbours are adopted, and the administrative guidance released during 2023 is incorporated into the law.
• Spain: The Law Establishing a Complementary Tax to Ensure a Global Minimum Level of Taxation for MNEs and Large Domestic Groups was published in the official gazette on 21 December 2024 and applies retroactively to tax periods starting on or after 31 December 2023. The legislation is generally aligned with the EU Pillar Two Directive and includes some aspects of the OECD administrative guidance released in April 2024. The legislation includes an IIR, UTPR and QDMTT. 
• Sweden: Legislation that amends the Pillar Two rules was published on 10 December 2024 and applies as from 1 January 2025. The legislation incorporates the OECD administrative guidance into Sweden’s rules, addresses artificial arrangements under the simplification rule, as well as foreign currencies and potentially allows the offset of foreign additional tax in cases involving controlled foreign companies.
• Switzerland: The Federal Council announced a consultation on 29 January 2025 and that will be open until 8 May on the basis under international law for enabling Switzerland to participate in the exchange of information under the global minimum tax; in-scope MNE would be able to submit the information centrally in a single jurisdiction. Starting on 1 January 2025, in-scope companies can register on the Swiss online portal, which must be completed before filing the GloBE tax return (generally by 30 June 2026).
• Thailand: An emergency decree that introduces Pillar Two rules was published in the official gazette on 26 December 2024 and applies as from 1 January 2025. The measures are generally in line with the OECD GloBE rules and include an IIR, a UTPR and a DMTT. See article in this issue.
• United Arab Emirates: The government announced on 6 February 2025 that domestic minimum top-up tax legislation has been enacted and applies as from 1 Jan 2025.
• United Kingdom: On 19 December 2024, the government introduced amendments to the latest finance bill to add the UTPR to the Pillar Two rules. The UTPR is expected to apply beginning in 2025, with a transitional safe harbor available until the end of 2026 for MNEs that face at least a 20% combined nominal income tax rate in their parent jurisdiction. A temporary exclusion from the UTPR will be available to companies that operate in six or fewer jurisdictions and that meet other qualifications in terms of tangible asset value.
• United States: President Trump issued an Executive Order (EO) on 20 January 2025 declaring that the OECD global minimum corporate tax initiative “has no force or effect” in the US, effectively withdrawing the US from any participation in the global initiative. A memorandum released shortly after the EO directs the Treasury Department, in consultation with the United States Trade Representative, to investigate whether any foreign countries have tax rules in place or that are likely to be put in place that disproportionately affect American companies, and then to come up with options for “protective measures.” See article in this issue.