Pillar Two: Updates June 2023

We continue to witness significant legislative activity worldwide as jurisdictions progress towards implementing the global minimum taxation rules. Here are some noteworthy updates from June:

• Denmark: The Danish Ministry of Taxation proposed The Minimum Taxation Act, which aligns with the EU Minimum Tax Directive and includes an Income Inclusion Rule (IIR), an Undertaxed Profit Rule (UTPR), and a Qualified Domestic Top-Up Tax (QDTT). The proposed legislation is currently undergoing a hearing process, and questions/remarks can be submitted until August 18, 2023.
• Netherlands: The draft legislation regarding Pillar Two was submitted to the Dutch Parliament. This bill sets the Netherlands on track to incorporate Pillar Two of the EU Directive into its domestic legislation by December 31, 2023. It will be discussed in Parliament in the coming months.
• Switzerland: Through a public vote on June 18, the Minimum Taxation Ordinance was approved, allowing the Swiss Federal Council to introduce Pillar Two rules through an ordinance until a permanent tax bill is enacted. The Income Inclusion Rule (IIR) and Qualified Domestic Minimum Top-up Tax (QDMTT) are expected to take effect on January 1, 2024, while the decision on implementing the Undertaxed Profits Rule (UTPR) is pending.
• Thailand: To mitigate the impact of Pillar Two on multinational enterprises, the Board of Investment of Thailand introduced measures, including a 50% corporate income tax reduction for new and existing projects. In-scope MNEs are advised to conduct an impact assessment on Pillar Two to evaluate the possibility of their effective tax rate in Thailand falling below 15%.
• United Kingdom: On June 15 2023, partial draft guidance was issued on the multinational top-up tax, applicable for accounting periods starting from December 31, 2023. The guidance covers general chargeability, scope (including excluded entities and revenue threshold test), and administration. Additional chapters addressing calculation aspects will be released in the future. Stakeholders can provide comments on the draft guidance until September 12, 2023.
• United States: Chairman Jason Smith introduced H.R. 3665, the Defending American Jobs and Investment Act, in response to the OECD Pillar Two rules. The proposed bill seeks to establish a reciprocal U.S. tax on foreign investors from jurisdictions implementing Pillar Two rules on American businesses. The tax would gradually increase by 5% annually for four years, with a fixed increase of 20% during the period of "unfair taxes."
• Vietnam: The General Department of Taxation collaborated with OECD experts to guide tax officers on global minimum tax regulations. The Vietnamese government aims to finalize the Scheme and submit legal regulations to the National Assembly by October 2023, with enforcement from January 1, 2024.

At WTS Global, we understand the importance of staying up-to-date with these developments. With our representation in over 100 countries, we provide a comprehensive overview of the implementation status of the Pillar Two rules in 72 countries.

Our tax experts continually update this information on a monthly basis, ensuring the most up-to-date insights.

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