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The saga continues: implementing Pillar Two in the UK

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The UK government has recently taken another step towards implementing the GloBE model rules by introducing to Parliament as part of Finance (No.2) Bill 2022/23 the second draft of legislation. This update builds on the first draft that was released in July 2022 and as expected introduces a new income inclusion rule through the multinational top-up tax which will require qualifying multinational groups to pay a top-up tax where their foreign entities have a jurisdictional effective tax rate of less than 15%. Notable additions to the draft legislation include provisions relating to the OECD guidance on safe harbours and penalty relief (published in December 2022) and OECD Administrative Guidance (published in February 2023). In addition a qualified domestic minimum top-up tax named the domestic top-up tax will be introduced which requires large groups including those operating exclusively in the UK ...

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