Pillar Two: Updates February 2024

Pillar Two is unfolding on the global stage. Over 30 jurisdictions worldwide have either enacted the Global Anti-Base Erosion (GloBE) rules or unveiled draft legislation, with more countries expected to join the movement in 2024.

Here’s a brief overview of the progress made across various countries in February:

• Bahamas: On 21 February 2024, the Bahamas government announced its plan to introduce a QDMTT. The draft bill is anticipated by late May 2024, followed by an extensive public consultation period throughout the summer. This process aims to refine the legislation before its submission to Parliament after the summer recess.
• Estonia: On February 8, 2024, Estonia's Finance Ministry announced the approval of Pillar Two legislation, with implementation deferred to 2030 but including specific reporting obligations. It now awaits review by the Estonian Parliament and, if passed, will proceed to the President for approval. If signed into law, the reporting obligations will take effect on the specified date.
• Malta: On February 20, 2024, the Official Gazette published the regulation for implementing the EU Minimum Tax Directive, with Malta choosing to delay the Income Inclusion Rule (IIR) and Under Taxed Payments Rule (UTPR) until after December 31, 2029. The regulation focuses on administrative aspects necessary for this deferral, requiring Maltese entities to appoint a foreign entity for submitting the GloBE Information Return. It omits provisions on IIR and UTPR, and it's unclear if a Domestic Minimum Top-up Tax (DMTT) will be introduced later.
• Singapore: In its 2024 Budget, presented to Parliament on February 16, 2024, Singapore committed to adopting the Income Inclusion Rule (IIR) and a Domestic Top-up Tax for qualifying multinational enterprises, effective for financial years starting January 1, 2025. This follows the 2023 Budget announcement on February 14, 2023, confirming plans to implement GloBE rules and the Domestic Top-up Tax from the same date. The process involves selective consultations, with broader industry engagement anticipated in the future.
• South Africa: On February 21, 2024, South Africa released draft bills for the Global Minimum Tax and its administration, aimed at implementing the OECD's Pillar Two Model Rules. The legislation focuses on basic provisions for tax scope, collection, and administrative processes, directly referencing OECD guidelines, including Safe Harbour rules. It covers the application of the Income Inclusion Rule (IIR) and Qualified Domestic Minimum Top-Up Tax (QDMTT) from January 1, 2024, but excludes Under Taxed Payments Rule (UTPR) provisions. The bill details the domestic minimum top-up tax (DMTT) definition and requires entities to file a GloBE Information Return within 15 months of the fiscal year-end, with penalties for non-compliance set at ZAR 50,000. Public feedback is invited until March 31, 2024.

As these changes continue to evolve, it is imperative for businesses and stakeholders to stay informed and adapt to the new tax landscape. WTS Global, with its expansive network spanning over 100 countries, remains committed to providing a comprehensive overview of the Pillar Two implementation status in 72 countries. If you have specific inquiries regarding the Pillar Two rules and their implications for your business, we encourage you to reach out to our tax experts.

Read the Pillar Two - Implementation Status overview here.