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At a glance
- Treasury has released draft legislation for consultation to implement global and domestic minimum taxes, including:
- An Income Inclusion Rule (IIR) applying to years starting from 1 January 2024
- An Undertaxed Profits Rule (UTPR) applying to years starting from 1 January 2025
- A domestic minimum tax applying to years starting from 1 January 2024.
- In-scope MNEs will be required to lodge three new returns in an approved form to the ATO:
- A GloBE Information Return
- An Australian GloBE Tax Return
- A DMT Return.
- How EY can help.
On 21 March 2024, the Australian Treasury released Exposure Draft (ED) primary legislation and subordinate legislation, in the form of Rules, for Australia’s proposed adoption of the Organisation for Economic Co-operation and Development (OECD) Global Anti-Base Erosion (GloBE) Pillar Two global and domestic minimum tax rules, for consultation.
The ED primary legislation outlines the key aspects of the global and domestic minimum taxes, including the imposition of top-up tax, through an Income Inclusion Rule (IIR), an Undertaxed Profits Rule (UTPR) and a Domestic Minimum Tax (DMT).
The proposed Rules are in line with the OECD’s Model Rules and outline the key aspects of the computation of GloBE income and top-up tax, including Transitional Country by Country Reporting (CbCR) Safe Harbours.
Treasury also released a discussion paper on the interaction of global and domestic minimum taxes with certain existing income tax laws.
Submissions on the primary legislation and discussion paper are due by 16 April 2024, and submissions on the subordinate legislation are due by 16 May 2024. The release of the drafts will allow Australian based and global groups with a presence in Australia to progress their Pillar Two implementation projects including to address the technical impact of the rules as well as the organisation’s data and systems readiness to comply with and report on the rules.