Multinational top-up tax

Multinational top-up tax (MTT) implements in UK domestic law the global anti-base erosion rules (GloBE Rules) which form a key part of the Pillar Two international tax reforms developed by the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) (the Inclusive Framework). The GloBE Rules ensure that the largest multinational groups are subject to an effective tax rate (ETR) of at least 15% in every territory in which they operate. This is achieved through a system of ‘top-up taxes’ that brings the total amount of tax paid by a multinational group on its excess profit to 15%. There are two charging mechanisms for imposing top-up tax. The Income Inclusion Rule (IIR) is the primary charging mechanism and the Undertaxed Profits Rule (UTPR) is the secondary or backstop charging mechanism. For more information about:

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the GloBE Rules (and Pillar Two more generally), see Practice Note: The OECD ‘two pillar’ solution—Pillar Two, and
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Pillar one, see Practice Note: The OECD ‘two-pillar’ solution—Pillar One

MTT encompasses both the IIR and the UTPR. The IIR element

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