UK and International Tax news
HM Treasury Consults On Implementation Of Pillar Two Rules
Thursday 13th January 2022
HM Treasury has launched a consultation on the implementation of the OECD’s Pillar 2 rules in the UK.
The OECD issued Pillar Two Model Rules last month and these rules define the scope and set out the mechanism for the so-called Global Anti-Base Erosion (GloBE) rules under Pillar Two. The next stage is for countries to introduce domestic legislation to give effect to the agreed rules. The OECD’s October 2021 statement set out an aim for jurisdictions to legislate these rules in 2022, with effect from 2023.
The UK government is now consulting on how the Pillar 2 Model Rules should be translated into domestic legislation. It anticipates that the parts of the legislation relating to the Income Inclusion Rule would be included in the Finance Bill 2022, to have effect from 1 April 2023.
The consultation also invites views on the UK implementation of the Undertaxed Profits Rule (UTPR) and on introducing a domestic minimum tax (DMT) in the UK to complement Pillar 2. The government anticipates that both the UTPR and the DMT would be introduced from 1 April 2024 at the earliest.
Work is ongoing in the OECD to finalise and agree the commentary to the Model Rules, which is expected to be published in the first quarter of 2022. There will also be further work in the OECD to agree an implementation framework which is designed to facilitate the effective implementation of the rules. This work is expected to be completed by the end of 2022.
The government has said that it recognises the Model Rules are complex and whilst the Commentary would have helped in explaining and clarifying the detail, it considers it is preferable to consult now so as to give businesses as much time as possible to consider these concepts.
Comments on the consultation have been requested by 4 April 2022.
For more information on the above, please contact Keith Rushen on 0207 486 2378.Contact Us