Pillar two: L-day developments

Alison Lobb

Lisa Shipley

As expected the draft legislation for the UK implementation of the pillar two global minimum tax covers only the income inclusion rule (IIR) at this stage. The undertaxed payments (or profits) rule (UTPR) draft legislation will be released in due course.

There is also for now no draft legislation for a UK domestic minimum top-up tax (such that UK profits would be topped-up to an effective tax rate of 15% payable to HMRC rather than picked up by other countries under either the IIR or UTPR mechanisms).

However the government has commented that there are ‘strong arguments’ in favour of a UK domestic minimum top-up tax – so whilst no decision has yet been taken it seems likely that a UK domestic minimum top-up tax will be introduced alongside the UTPR rules.

The UK legislation is drafted in UK legislative terms and it is structured and...

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