UK: Amendments to Pillar Two rules in amended Finance Bill 2024-2025

Including incorporation of provisions from OECD June 2024 Administrative Guidance

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February 7, 2025

HM Revenue and Customs (HMRC) on January 27, 2025, published amendments to the Finance Bill 2024-2025, including further amendments to the UK Pillar Two rules. 

Key highlights include: 

  • UTPR: Several amendments are proposed for the draft UTPR rules, including provisions for determining the allocation of the UTPR top-up tax liability between UK entities, and special rules applying for joint venture groups.
  • OECD June 2024 Administrative Guidance: The bill incorporates several provisions from the OECD June 2024 Administrative Guidance, including rules on allocating cross-border current and deferred tax expenses, and the updated guidance on deferred tax liability (DTL) recapture rules.
  • Qualification of permanent establishments (PE) as excluded entity: An amendment was introduced to allow a PE, in which a main entity does not have an ownership interest, to qualify as an excluded entity. This change would apply retroactively for accounting periods beginning on or after December 31, 2023. 

Read a February 2025 report prepared by the KPMG EU Tax Centre

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