FA 2025 includes various provisions connected to the UK’s implementation of the OECD Pillar Two global minimum tax initiative. There are three main things to note:
Undertaxed Profits Rule (UTPR): The main mechanism by which countries will collect Pillar Two top-up tax is the Income Inclusion Rule (IIR) which is a CFC-type charge that applies to the ultimate parent entities of in-scope MNE groups. The UK implemented the IIR in 2023 in the form of Multinational Top-Up Tax (MTT). The Act extends that MTT legislation to include the UTPR which will apply to accounting periods beginning on or after 31 December 2024. The UTPR is a back-up charging rule under which any top-up tax due from a group that is not collected under the IIR (say because the parent entity is located in a non-implementing jurisdiction) is allocated among jurisdictions in proportion to the group’s tangible asset value...
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FA 2025 includes various provisions connected to the UK’s implementation of the OECD Pillar Two global minimum tax initiative. There are three main things to note:
Undertaxed Profits Rule (UTPR): The main mechanism by which countries will collect Pillar Two top-up tax is the Income Inclusion Rule (IIR) which is a CFC-type charge that applies to the ultimate parent entities of in-scope MNE groups. The UK implemented the IIR in 2023 in the form of Multinational Top-Up Tax (MTT). The Act extends that MTT legislation to include the UTPR which will apply to accounting periods beginning on or after 31 December 2024. The UTPR is a back-up charging rule under which any top-up tax due from a group that is not collected under the IIR (say because the parent entity is located in a non-implementing jurisdiction) is allocated among jurisdictions in proportion to the group’s tangible asset value...
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