What is Pillar Two?
What is the domestic top-up tax?
The Pillar Two rules include:
- an Income Inclusion Rule (IIR)
- an Undertaxed Profits Rule (UTPR)
- and
- a domestic top-up tax.
The domestic top-up tax allows jurisdictions to collect any top-up tax due from domestic entities before the application of IIR top-up tax or UTPR top-up tax. It is creditable against any IIR top-up tax. The IIR top-up tax or UTPR top-up tax may not apply to domestic entities if the domestic top-up tax jurisdiction is granted Safe Harbour status. Safe Harbour status is granted by the Organisation for Economic Co-operation and Development (OECD).
The OECD has published a central record of legislation with transitional qualified status. Ireland is listed as one of the jurisdictions whose tax legislation has secured transitional qualified status.
Ireland introduced a domestic top-up tax which came into effect for fiscal years commencing on, or after, 31 December 2023.
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