The ‘Legislation Day’ July 2023 draft legislation setting out the multinational top-up tax undertaxed profits rules has been amended to include safe harbours and other features of the OECD’s latest administrative guidance. The main amendments to the draft legislation are as follows:
a new chapter providing for an undertaxed profits rule (UTPR) transitional safe harbour election, where the ‘untaxed amounts’ of all group members in the territory of the ultimate parent are treated as zero for an accounting period;
a new schedule introducing a qualifying domestic minimum top-up tax (QDMTT) safe harbour election where the filing member may make an election under which all members of the group located in a territory are treated as not having top-up tax amounts for the purposes of calculating multinational top-up tax;
new sections on the treatment of tax credits;
a placeholder for a new section on the treatment of operating leases;
a new section to introduce the power to make regulations concerning the treatment of payroll costs and assets; and
a new Part to provide for a transitional reporting election.
Revised explanatory notes have been issued to reflect the amendments.
The ‘Legislation Day’ July 2023 draft legislation setting out the multinational top-up tax undertaxed profits rules has been amended to include safe harbours and other features of the OECD’s latest administrative guidance. The main amendments to the draft legislation are as follows:
a new chapter providing for an undertaxed profits rule (UTPR) transitional safe harbour election, where the ‘untaxed amounts’ of all group members in the territory of the ultimate parent are treated as zero for an accounting period;
a new schedule introducing a qualifying domestic minimum top-up tax (QDMTT) safe harbour election where the filing member may make an election under which all members of the group located in a territory are treated as not having top-up tax amounts for the purposes of calculating multinational top-up tax;
new sections on the treatment of tax credits;
a placeholder for a new section on the treatment of operating leases;
a new section to introduce the power to make regulations concerning the treatment of payroll costs and assets; and
a new Part to provide for a transitional reporting election.
Revised explanatory notes have been issued to reflect the amendments.
