MTT01010 - Introduction: Overview of Multinational Top-up Tax and Domestic Top-up Tax
Multinational Top-up Tax (MTT) has been introduced in the UK as part of Pillar Two, an initiative developed as part of a broader agreement made by the G20 to reform the international tax framework to tackle base erosion and profit shifting, in response to challenges raised by the digitalisation of the economy. The UK has worked closely with international partners to develop the Pillar Two Model Rules at the Organisation of Economic Co-operation and Development (‘OECD’), as part of the Inclusive Framework of nations.
Together, the GloBE rules will ensure that large groups will pay an effective rate of tax of at least 15% in every territory in which they operate.
UK implementation
The IIR is being implemented in the UK as Multinational Top-up Tax, and will apply for accounting periods beginning on or after 31 December 2023. The UTPR is also being implemented within Multinational Top-up Tax as a separate charging mechanism, for period beginning on or after 31 December 2024.
Many of the countries that are signatories to Pillar 2 will also be implementing a Qualifying Domestic Minimum Top-up Tax (QDMTT). The UK is implementing a QDMTT, called Domestic Top-up Tax (DTT). This will ensure that the UK operations of the largest groups will be subject to the minimum effective tax rate and therefore face no additional top-up charges as a result of Pillar 2.
DTT shares the implementation date of MTT.
See MTT61010 for an overview of MTT, and MTT65010 for an overview of DTT.