In last month’s Autumn Statement, it was announced that the “undertaxed profits rule” (“UPR”) will take effect in the UK for accounting periods beginning on or after 31 December 2024. This is to be legislated for in a future Finance Bill, although draft legislation is available in a policy paper. The UPR aims to ensure that any top-up taxes that are not paid under another jurisdiction’s Pillar Two rules are brought into charge in the UK.
In addition, the Government is legislating for the technical amendments published in draft in July and September in the Autumn Finance Bill 2023.
Pillar Two aims to ensure that Multinational Enterprises (“MNEs”) will be subject to a minimum 15 percent effective tax rate in every jurisdiction in which they operate and will apply to in-scope groups’ accounting periods beginning on or after 31 December 2023.
As it is important that the UK implements Pillar Two to a similar timeline as other countries, the Government will continue to monitor international developments on implementation.
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