Pillar Two – Isle of Man Update

The Isle of Man (“IOM”) Income Tax Division (“ITD”) has published an update on the IOM’s intended implementation of OECD Pillar 2 Global Minimum Tax (“Pillar 2”). This update, which forms the basis of a letter which we understand the ITD has sent to all IOM entities that it is aware are likely to be within the scope of the new rules, can be found here. (Please see here for a high level summary of the Pillar 2 rules)

The draft Pillar 2 legislation is now available on Tynwald’s Register of Business (here), to be considered by Tynwald at the November 2024 sitting. 

Following the previous announcement in May (link) the ITD have now confirmed that the IOM will be implementing a Multinational Top-up Tax (“MTUT”) (i.e. an Income Inclusion Rule or IIR) alongside the previously announced Domestic Top-up Tax (“DTUT”). The ITD have noted that it is anticipated that only a very small number of groups will be impacted by the implementation of the MTUT. 

As previously indicated, the rules will first come into effect in respect of accounting periods commencing on or after 1 January 2025.

The ITD are currently developing their online service which will enable in-scope groups to meet the DTUT and MTUT filing obligations. In-scope groups will be required to register for this online service once available, the registration deadline being 12 months from the start of the group’s ultimate parent entity’s first accounting period in scope of the IOM Pillar 2 legislation.

If you would like to discuss the IOM’s intended Pillar 2 implementation and how this may impact your group, please do not hesitate to contact us.