BEPS 2.0: Pillar 2 – How to prepare for the multinational top-up tax

The new taxes

MTT will be charged on UK parent members when a subsidiary is located in a non-UK jurisdiction and the profits arising in that jurisdiction are taxed below the 15% minimum rate. 

DTT applies the rules of MTT to the UK operations of groups and certain entities to ensure that UK entities will be taxed at 15%. This means that the UK entities will meet the minimum rate, ensuring that the UK, rather than any other jurisdiction, will collect all of the top-up taxes in respect of UK profits. 

Reporting 

If a group is within the scope of the new taxes, a group member must register with HMRC within 6 months of the end of the accounting period where they become qualifying.

The filing company will be required to submit a self-assessment return and information return to HMRC for each qualifying period. The first information return must be submitted to HMRC by 30 June 2026. 

The implementation of Pillar 2 will mean significant compliance and data gathering requirements for groups and UK companies of multinational groups. 

The UK has adopted the rules, but it remains to be seen whether the US will do the same and the recent change in administration leaves US commitment more uncertain than ever. 

We can help you determine whether your group is within the scope of the new additional taxes and support with Pillar Two compliance. 

Please complete the form below and one of our tax experts will be in touch.