As the international tax landscape continues to evolve, staying informed about the latest developments is crucial for businesses operating across borders. Here's a roundup of significant updates from May 2024 regarding Pillar Two, including insights into regulatory changes, compliance requirements, and implementation progress across various jurisdictions.
Eropean Union: On May 23, 2024 the EU Commission sent a reasoned opinion to Cyprus, Latvia, Lithuania, Poland, Portugal, and Spain for failing to fully implement the EU Minimum Tax Directive (Council Directive (EU) 2022/2523) into their national laws by the December 31, 2023 deadline. Despite notification from five countries, including Latvia and Lithuania, about delayed application of certain provisions, they are still obligated to enact Pillar Two requirements. Estonia, Greece, and Malta, previously warned, have complied. The six Member States have two months to respond and enact necessary measures. Failure to do so may lead to the Commission escalating the matter to the CJEU.
OECD: On May 24, 2024, the OECD released the 2024 Progress Report on Tax Co-operation for the 21st Century. This report sets out the advances being made in implementing the vision for co-operation amongst tax administrations with a specific focus on the Global Minimum Tax. It stresses the need for a common framework for risk assessment and control among multinational enterprises (MNEs), aiming to streamline compliance with the Global Anti-Base Erosion (GloBE) rules. Additionally, the report advocates for a robust dispute resolution mechanism to address inconsistencies in applying minimum tax rules and suggests reevaluating existing anti-abuse measures to align with Pillar Two objectives.
Meanwhile, countries worldwide continued their efforts to integrate the OECD's Pillar Two rules into their national legislation. Here's an overview of the latest advancements from May 2024:
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Belgium: A royal decree was published on May 21, 2024, clarifying registration requirements under Pillar Two, ensuring clarity and compliance for affected entities.
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Germany: On May 28, 2024, a draft tax return for Pillar Two purposes was published for consultation, outlining detailed requirements for reporting top-up tax liabilities and other pertinent information.
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Guernsey and Isle of Man: Both jurisdictions announced plans to introduce qualified domestic minimum top-up tax (QDMTT) and other measures, aligning with international standards.
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Italy: A ministerial decree was issued on May 28, 2024, to implement transitional Safe Harbour provisions under Pillar Two, providing clarity on compliance requirements for affected entities.
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Jersey: The government announced plans on May 22, 2024, to introduce an international information reporting (IIR) system and a Domestic Minimum Tax from 2025, ensuring alignment with global tax standards.
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Kenya: On May 13, 2024, the 2024 Finance Bill proposal, including plans for a Domestic Minimum Top-up Tax (DMTT) and a significant economic presence tax, was submitted to Parliament, signaling the country's commitment to international tax reforms.
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Spain: A public consultation was launched on May 16, 2024, on the regulation implementing minimum taxation rules, seeking feedback from stakeholders on various aspects of compliance and enforcement.
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Switzerland: Several Swiss cantons introduced tax changes in response to Pillar Two implementation, aiming to maintain competitiveness and attract investment.
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United Kingdom: MRC issued practical guidance on May 20, 2024, on Pillar Two registration requirements, providing clarity for entities operating in the UK.
For a comprehensive overview of developments across 72 jurisdictions, we invite you to read more in our detailed overview. Our team of tax experts worldwide stands ready to provide tailored guidance and assistance specific to your jurisdiction.
Read the Pillar Two - Implementation Status overview here.
