FB 2024: Further amendments to MTT and DTT included in the Bill
The amendments reflect comments received in response to the Government’s consultation to aid the UK in adopting OECD Pillar Two GloBE rules
Further amendments to UK Pillar Two rules
Finance Bill 2024 includes further proposed amendments to the UK’s multinational top-up tax (MTT) and domestic top-up tax (DTT) rules. On 18 July 2023 and 27 September 2023, the Government published draft legislation for stakeholder consultation, which sought to amend the original legislation. The latest amendments reflect responses received to that consultation and other adjustments necessary to ensure that UK legislation remains consistent with administrative guidance to the Global Anti-Base Erosion (GloBE) rules agreed by the UK and other members of the OECD Inclusive Framework.
MTT and DTT were introduced in Finance (No.2) Act 2023 as part of the UK’s adoption of the OECD’s Pillar Two GloBE rules and will have effect in respect of accounting periods beginning on or after 31 December 2023.
The majority of the key amendments included in Finance Bill 2024 have already been covered in our earlier article following the release of updated draft legislation in September.
Some key areas of amendment now included, but not covered by our previous article relate to:
- Scenarios where there is no requirement to prepare and file a country by country (CbC) report for an MNE group (allowing access to the transitional safe harbour election);
- A new, annual election required to apply the adjustments for companies in distress;
- Clarifying amendments in respect of the election to spread certain capital gains over five years;
- The treatment of operating leases for the purposes of the substance-based income exclusion calculation (implementing the OECD's Administrative Guidance from July 2023);
- The treatment of securitisation companies, covered bond vehicles and investment entities for DTT purposes;
- The potential uplift of deferred tax assets recorded at less than the minimum rate to a 15 percent rate (removal of the annual election requirement); and
- Clarification that groups exclusively comprised of excluded entities do not need to register with HMRC for MTT purposes.
Should you wish to discuss this draft legislation and what it may mean for your business, please contact the authors or your usual KPMG in the UK contact.
