MTT15110 - Scope: Safe harbours: QDMTT safe harbour: Overview
A domestic minimum top-up tax is a tax that is imposed by a territory on entities located within that territory, which replicates the design of Pillar 2. These taxes are intended to ensure that top-up amounts which would otherwise be charged under Pillar 2 (potentially by a different territory) are always charged and collected by the territory where the entities are located.
Where a domestic minimum top-up tax provides sufficiently similar outcomes to Pillar 2, it will be deemed to be a qualifying domestic minimum top-up tax (QDMTT, referred to as qualifying domestic top-up tax in the legislation), by agreement at OECD level. This status affects how the tax is credited under the Pillar 2 computations (see MTT31020).
Where a QDMTT meets further criteria, the QDMTT will also be accredited for the QDMTT safe harbour. Where a QDMTT is accredited, group members in the territory covered by the QDMTT may be treated, by election, as having no top-up or additional top-up amounts.
The safe harbour is “switched off” in particular cases relating to the design and application of the QDMTT. Where a switch-off applies, a group will not meet the criteria to make the safe harbour election for the relevant members in that territory.
Investment entities, minority owned members, and joint venture groups
The QDMTT safe harbour election is made separately for standard members, joint venture groups, investment entities and minority owned members.
See MTT15130 for further guidance.