On March 31st, 2023, the Irish Ministry of Finance released a Feedback Statement (FBS) on the Pillar Two Model Rules implementation. The FBS includes draft legislation on key elements of the GloBE rules, and it’s open for comments until May 8th, 2023.
The key elements included in the Feedback Statement are the following:
- Income Inclusion Rule (IIR) will be applicable from fiscal years commencing on or after 31 December 2023
- Under-Taxed Profits Rule (UTPR) will be applicable from fiscal years commencing on or after 31 December 2024
- As Ireland’s 12.5% trading rate of corporation tax is below the agreed 15% minimum effective rate, it is considered appropriate for Ireland to introduce a Qualified Domestic Minimum Top-up Tax (QDMTT) – referred to as QDTT on the Irish FBS. The Feedback Statement provides different approaches for its calculation:
- Prepare a detailed part of the legislation to set out all of the elements required to calculate and implement a QDTT, separate and stand-alone from the parts of the legislation required to implement the IIR and UTPR, or
- Prepare shorter provision(s) which would reference the detailed provisions relating to the IIR with any necessary modifications.
- The FBS proposes that the administration of the GloBE rules and associated Top-Up Taxes will be kept separate from the Irish corporate tax regime.
Furthermore, the Government of Ireland expects a second Feedback Statement to be published by mid-2023, that will append detailed draft legislation regarding Safe Harbors.
The final legislative provisions will be published as part of the Finance Bill in October 2023 and should be transposed into law in mid-to-late December 2023. The rules will be effective from December 31, 2023.
Observation: Additional clarity is needed in terms of how the existing Irish corporation tax rules will coexist with the GloBE rules or where changes may be required. We expect that such interaction matters will be opened up to wider consultation in the second feedback statement mentioned above.
For further consultation on the applicability and implementation of the Pillar Two GloBE rules for your organization, please contact:
Jasper Verkamman, Associate
Raymund Gerardu, Managing Partner