Pillar Two: Updates April 2023

In March and April 2023, several countries made significant announcements related to the implementation of the OECD's Pillar Two initiative.

Australia initiated a consultation process to gather valuable insights that will assist the government in developing its approach to implementing Pillar Two rules.

Canada released its Budget 2023, reaffirming its commitment to implementing Pillar Two.

Japan enacted the Pillar Two Income Inclusion Rule being applicable for tax years from 1 April 2024 onwards.

In Ireland the Department of Finance has released a feedback statement proposing legislation to implement Pillar Two, following a consultation process on implementing the EU Minimum Tax Directive in 2022. Stakeholders have until May 8, 2023, to provide feedback on the proposed implementation of the rules into Irish law.

Kenya announced plans to revise the existing digital services tax and bring it in line with the Two-Pillar solution. This marks a significant shift in Kenya's policy as the country had previously chosen to retain the DST and declined to sign the statement of the Inclusive Framework related to Pillar Two rules in October 2021.

Despite its initial opposition to the two-pillar solution, Nigeria's Federal Inland Revenue Service (FIRS) recently held a two-day workshop with the OECD and released a statement emphasizing the need for immediate implementation of fiscal policy measures to address the potential impacts of Pillar Two rules. This shows that Nigeria is now showing some flexibility and recognizes the importance of implementing measures to comply with the global consensus on taxation.

In Sweden the Ministry of Finance released an amendment to its interim report proposing new provisions related to covered taxes, corporate restructurings, joint ventures, and eligible distribution tax systems. The amendment also includes a temporary safe harbor rule, similar to the one in the model rules.

The UK published its Spring Finance Bill 2023, which included provisions for a "multinational top-up tax" and a "domestic top-up tax." Recently few amendments were made to the proposal, to address the risk of possible redundancies and ensure multinationals comply with minimum anti-avoidance standards.

If you would like to know the current information on Pillar Two implementation in your country, view our latest bundled overview on 72 countries here.

Feel free to contact our tax experts if you have any questions on Pillar Two rules and their impact on your business.

Yours sincerely,

WTS Global