Pillar Two: Updates March 2024

Throughout March 2024, several countries made significant strides in implementing the OECD's Pillar Two rules into their domestic legislation. Here's a brief summary of the latest developments:

• Australia: The Australian Treasury released draft legislation for consultation on implementing GloBE rules. It includes bills for top-up tax imposition, framework provision, detailed regulations, and administrative provisions. The proposed rules consist of an income inclusion rule (IIR) and an under-taxed profits rule (UTPR), with implementation starting from January 1, 2024.

• Lithuania: The Lithuanian government adopted a resolution to submit draft legislation implementing Pillar Two into domestic law to Parliament. The legislation, in line with the EU Minimum Tax Directive, delays the application of the IIR and UTPR until December 31, 2029.

• New Zealand: Enacted legislation adopts the OECD Global Anti-Base Erosion Pillar Two rules into domestic law. The rules apply to fiscal years beginning on or after January 1, 2025, primarily following the OECD Guidelines.

• Sweden: The Swedish Ministry of Finance released a proposal to revise its Pillar Two law, incorporating pertinent provisions from the OECD Administrative Guidance issued in February, July, and December 2023. While most of the proposed legislative changes are set to take effect on January 1, 2025, the proposal suggests that multinational enterprises (MNEs) can opt to apply these provisions for tax years starting after December 31, 2023 (or, for Swedish partnerships, financial years beginning after December 31, 2023).

• Thailand: Released Pillar Two draft legislation for public consultation, intending to incorporate an IIR, a Qualifying Domestic Minimum Top-up Tax (QDMTT), and a UTPR consistently with the OECD GloBE Rules.

• United Arab Emirates: Launched a public consultation on implementing GloBE rules, seeking feedback on policy options for various components such as the Income Inclusion Rule, Undertaxed Profits Rule, and Domestic Minimum Top-up Tax.

• United Kingdom: Announced the introduction of anti-abuse rules for Pillar Two, applying the anti-arbitrage rules in the OECD Administrative Guidance published in December 2023.

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.