Pillar Two ― overview of the UK’s domestic top-up tax

Produced by a Tolley Corporation Tax expert

Corporation Tax

Guidance

Finance Act 2024 amends certain aspects of the multinational top-up tax and domestic top-up tax rules contained in Finance (No 2) Act 2023. The amendments have retrospective effect for accounting periods beginning on or after 31 December 2023. The original draft legislation for Finance Bill 2024 contained provisions implementing the Under Taxed Profits Rule (UTPR) which is due to have effect for accounting periods beginning on or after 31 December 2024. However, in Autumn Statement 2023, it was confirmed that the UTPR will be introduced by a later Finance Bill, although the effective date will remain the same. The ‘offshore receipts in respect of intangible property’ (ORIP) rules will also be abolished for income arising from 31 December 2024 alongside the introduction of the UTPR.

What is the domestic top-up tax?

The UK has committed to introduce measures which support the OECD’s two-pillar approach to ensuring that large multinational enterprises (MNEs) pay their fair share of

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