Multinational Top-up Tax and Domestic Top-up Tax

MTT49010 - Particular entities and adjustments: Transitional provisions: Overview

Certain MTT provisions only apply when a group first enters the regime, or in the first years of the regime. These transitional provisions are set out in Schedule 16 of Finance (No.2) Act 2023.

Intra-group transfers before entry into regime

For intra-group transfers taking place on or after 1 December 2021, a special rule may apply to prevent a step-up in basis for MTT purposes. This rule is not necessary if the transferor is subject to a Pillar 2 tax at the time of the transfer, because any gain on the transfer will be included in the adjusted profits for the purposes of the tax.

See MTT49020 for guidance on intra-group transfers.

Transitional relief for substance-based income exclusion (SBIE)

For periods commencing in 2032 or earlier, there are different rates applied for the purposes of calculating the SBIE amount. See MTT32000+ for guidance on calculating the SBIE.

These rates also apply for the purpose of determining the SBIE amount for the purpose of the routine profits test under the transitional safe harbour (see MTT15960).

Transitional safe harbour

For periods commencing on or before 31 December 2026 and ending on or before 30 June 2028, a group may qualify for the transitional safe harbour for a territory. This aims to reduce the compliance burden of groups in the early years of the regime. See MTT15900+ for guidance on the transitional safe harbour.

Transitional reporting election

For periods ending on or before 31 December 2028 and ending before 1 July 2030, a group may elect, under certain circumstances, for different reporting requirements to apply in respect of a territory. See MTT52900 for guidance on the transitional reporting election.