The Maltese implications of the Pillar 2 Directive

Introduction

Council Directive (EU) 2022/2523 (the ‘Minimum Tax Directive’ or ‘Directive’) was published in the Official Journal of the European Union on 22 December 2022, legislating the OECD’s BEPS 2.0 Pillar Two Model Rules. The Pillar Two Model Rules are designed to ensure large multinational enterprises (MNEs) pay a minimum level of tax on the income arising in each jurisdiction where they operate.

MNEs in scope of the rules are required to calculate their effective tax rate for each jurisdiction where they operate, and, where applicable, pay top-up tax for the difference between their effective tax rate per jurisdiction and the 15% minimum rate. Any resulting top-up tax is generally charged under an Income Inclusion Rule (‘IIR’) applicable at the level of the ultimate parent entity (‘UPE’) of the MNE or any other direct/indirect intermediary parent entity ('IPE'). The Undertaxed Profits Rule (‘UPTR’) acts as a backstop when the UPE and none of the IPEs is subject to an IIR in accordance with GloBE Rules.

The Pillar Two Model Rules also contemplate the possibility that jurisdictions introduce their own domestic minimum top-up tax based on the GloBE mechanics (‘QDMTT’), which eliminates (or is at least fully creditable against) any liability under GloBE, thereby preserving a jurisdiction’s primary right of taxation over its own income.

In addition, where the Minimum Tax Directive is concerned, the text allows delayed adoption of an IIR and UTPR up to 31 December 2029 by those Member States in which no more than 12 ultimate parent entities of in-scope MNE groups are based.

The Directive requires Member States to transpose the rules into domestic law by 31 December 2023. 

Who Should Attend?

Accountants, advisors and tax practitioners working with MNEs wishing to obtain a more in-depth view of the Minimum Tax Directive. 

Session Outline

This seminar will be split into two parts. In the first part, the focus will be on the focal principles enshrined in the Pillar Two Model Rules and supplementary documentation, particularly:

• how the effective tax rate and top-up tax will be calculated on a jurisdictional basis;
• the manner in which the IIR, UTPR and QDMTT will apply in practice and how they will interact amongst each other; and
• a basic overview of safe harbour rules which may apply as from 1 January 2024.

In the second part of the seminar, the focus will shift on what the matters above mean for Maltese based MNEs and Constituent Entities for non-Maltese based MNEs, in light also of the options available to Malta in terms of the Minimum Tax Directive. 

Registration fee

This is a free event. Click on Register to confirm your place. 

CPE Accreditation

This event is eligible for 2 CPE Core hours accreditation.

Speakers

Jason Yen is a principal in the International Tax and Transaction Services practice based in Ernst & Young LLP’s National Tax Department in Washington, DC. With his in-depth tax knowledge, he provides insights to organizations in the fast-changing international tax landscape. Prior to joining the firm, Jason was the Associate International Tax Counsel for the U.S. Department of the Treasury’s Office of Tax Policy. During his tenure, he participated in many significant international tax developments, including serving as the lead negotiator to the Organisation for Economic Co-operation and Development’s Pillar Two minimum tax project and leading the regulatory implementation of several key aspects of the Tax Cuts and Jobs Act of 2017.

Before joining the Treasury Department, Jason worked in the tax practice of an international law firm in Washington, DC. Jason earned his BSE from Princeton University and his JD from Harvard Law School.

Robert is EY Malta's Tax Leader, a tenured senior lecturer at the University of Malta and a member of the European Association of Tax Law Professors. In the 2015-2017 IBFD General Report on the Protection of Taxpayers’ Rights, Robert was described as a well-known authority broadly experienced in the practical protection of taxpayers’ rights and a prominent member of the legal practice. In Malta, Robert argued cases at all levels arguing a suite of Constitutional cases that have led to a paradigm shift relating to the legal classification of administrative penalties. He submitted arguments in the Grand Chamber Case ECtHR Case Lekic v. Slovenia and forms part of the Supervisory Council of the Observatory for Taxpayers’ Rights. In 2021, the EATLP invited him to draft its submissions to the EU Commission relating to EU taxpayers’ rights. Having served as a panellist at the 2015 IFA Congress, he formed part of a study group of the International Law Association on the “Protection of Taxpayers’ Rights” (co-chaired by Advocate General Juliane Kokott and Pasquale Pistone). Robert is a published author on tax law publishing articles in European Taxation, EC Tax Review, World Tax Journal and the British Tax Review. Robert’s most recent publication is Taxation at the European Court of Human Rights co-authored with former ECtHR judge Pinto de Albuquerque (Wolters Kluwer Law 2023).

Silvio is a Director within EY Malta’s International Tax & Transaction Services/Business Tax Advisory department. Silvio is a CPA by profession and joined EY Malta on a full-time basis in 2012. Initially, Silvio worked within the Business Tax Compliance department, wherein he has assisted both domestic and multinational corporate clients and individual clients in fulfilling their annual tax compliance obligations in Malta. After two years, Silvio moved on to the tax advisory arm of the firm and has since been advising clients on direct tax issues from both a domestic and an international perspective. Silvio lectures Maltese tax modules for ACCA and has successfully sat for the Advanced Diploma in International Taxation at the Chartered Institute of Taxation.