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D4.320 Pillar Two in the UK—overview of the Pillar 2 domestic top-up tax

For the latest New Developments, see ND.2490, ND.2740 and ND.2751.

The domestic top-up tax is the name given to the UK's 'qualifying domestic minimum top-up tax' (QDMTT), which must be introduced as a requirement of the UK's obligations under the OECD's Pillar Two rules. Details of the origins of Pillar Two are set out in D4.301. A QDMTT is a top-up tax charged by a territory on the profits of entities situated in that territory, to ensure that they pay a minimum level of tax there. Consequently, the UK's domestic top-up tax results in the UK members of a multinational group having an effective tax rate of 15% as a result of UK taxes only.

Any QDMTT paid by an entity will be fully creditable against any multinational top-up tax liability arising under Pillar Two rules. This ensures any top-up tax due under the Pillar Two framework from UK economic activities and profits, goes directly to the UK