While Tax Matters Digest has been taking a summer break, the wheels have still been turning in the world of Pillar Two and this article provides a quick update on what has happened over the last month.
HMRC manual published
On 5 August 2025, the long-awaited Multinational Top-up Tax (MTT) and Domestic Top-up Tax (DTT) HMRC manual was published. The content of the manual was previously published in four separate tranches of draft guidance starting in June 2023 – our earlier article provides details.
There has been a lot of reorganisation of content since the earlier draft and some new content added, including guidance on a wholly domestic group or entity entering the scope of MTT at MTT27020 and a section on the insurance industry at MTT45400+.
There are still a number of areas outstanding where further guidance has been promised shortly “including pages on tax equity partnerships and the remaining investment entity pages, the section on post-filing adjustments, a section of insurance specific guidance for Lloyd's, the page commenting on the interaction between legislation, the guidance manual, and OECD documents, and tables mapping the legislation to OECD documents.” Some examples are also being finalised.
HMRC say that they continue to invite comments on the guidance manual even though the formal consultations on the draft have closed. They have also said that stakeholders who responded to the earlier consultations who believe points raised have not been dealt with can contact HMRC via the consultation inbox or, if it requires a more urgent approach because it impacts a business, via the compliance inbox.
Signatories to agreement on exchange of GloBE information published
On 6 August 2025, the OECD published a list of jurisdictions that have signed the Multilateral Competent Authority Agreement on the Exchange of GloBE Information (GIR MCAA) under Pillar Two, which outlines conditions for the automatic exchange of GloBE Information Return (GIR) information under the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
The list of signatories was updated again on 26 August 2025 and, as at that date, contains 15 jurisdictions. The majority are from Europe, including the UK, as well as Japan, Korea and New Zealand.
OECD list of qualifying taxes updated
On 18 August 2025, the OECD released an updated version of the ‘Central Record of Legislation with Transitional Qualified Status’. Pillar Two provisions in 16 jurisdictions were added: Brazil, Gibraltar, Indonesia, Isle of Man, Japan, Jersey, Malaysia, New Zealand, North Macedonia, Poland, Portugal, Singapore, South Africa, Switzerland, Thailand and the United Arab Emirates.
The UK’s Pillar Two MTT rules recognise taxes paid under other jurisdictions ‘qualifying’ income inclusion rules and domestic top-up taxes – these are ‘qualifying’ if they are consistent with the OECD model rules and commentary, i.e. included in the OECD Central Record. The UK list of qualifying taxes is therefore likely to be updated shortly to reflect the additions made by the OECD. HMRC publish this list in the new MTT and DTT manual at MTT09970.
Reminder of registration deadline for March year end groups
While not a new development, this is an opportune time to remind readers that groups within the scope of the Pillar Two rules in the UK must register within six months of the end of the first accounting period beginning on or after 31 December 2023. For impacted groups with a 31 March 2025 year end this means the deadline for registration is imminent – 30 September 2025.
Our earlier article provides further details on the requirements.
OECD progress on ‘side-by-side’ approach
We understand that discussions are continuing at the OECD on a so-called ‘side-by-side’ system, whereby US parented groups are fully excluded from the Undertaxed Profits Rule (UTPR) and the Income Inclusion Rule (IIR) in respect of both their domestic and foreign profits. This follows an agreement between the US and the G7 at the end of June 2025 which was discussed in our earlier article.
There has been no official update from the OECD over the summer so we will provide further details when they become available in a future edition.
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