On 21 March 2024, the Australian Treasury announced that it launched public consultations on primary legislation and subordinate legislation for implementing the Pillar 2 global minimum tax. The primary legislation provides guidelines for implementing the GloBE Rules and a DMT in Australia.
The Primary Legislation
- Imposition Bill: Taxation (Multinational—Global and Domestic Minimum Tax) Imposition Bill 2024;
- Assessment Bill: Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024;
- Consequential Bill: Treasury Laws Amendment (Multinational— Global and Domestic Minimum Tax) (Consequential) Bill 2024.
The Imposition Bill is a taxation bill that imposes a global and domestic minimum tax (in these explanatory materials referred to as top-up tax).
The Assessment Bill establishes a new taxation framework to implement the GloBE Rules and a DMT for certain MNE Groups. The framework establishes rules for assessing the domestic minimum top-up tax and the global minimum top-up tax liability of certain MNEs as a part of a coordinated global approach. The Assessment Bill ensures that MNEs within the scope of the GloBE Rules have an ETR of at least 15% regarding the GloBE income arising in each jurisdiction in which they operate, consistent with the GloBE Rules.
The Consequential Bill sets out the consequential and miscellaneous provisions necessary for the collection and recovery of GloBE top-up tax and Domestic top-up tax.
The Domestic top-up tax and IIR top-up tax will be applicable for fiscal years starting on or after 1 January 2024. The UTPR top-up tax will take effect for fiscal years starting on or after 1 January 2025.
The Subordinate Legislation
The subordinate legislation includes the following:
- Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024
- Taxation (Multinational—Global and Domestic Minimum Tax) Rules 2024.
The Taxation (Multinational—Global and Domestic Minimum Tax) Bill 2024 (the Assessment Bill) provides that the Minister may make Rules required or permitted by the Assessment Bill. The purpose of Taxation (Multinational—Global and Domestic Minimum Tax) Rules 2024 (the Rules) is to empower the Minister to detail the specifics in computing top-up tax.
While the Assessment Bill establishes a framework to apply top-up tax, the Rules include the detailed calculations required to arrive at a liability to top-up tax. The Rules include details on:
- computing and allocating income;
- computing and allocating adjusted covered taxes;
- application of the rules to investment and tax transparent entities; and
- transitional provisions for MNE Groups in the initial phases of being in the scope of the Assessment Bill.
The deadline to receive comments on the primary legislation is 16 April 2024, while the deadline to receive comments on the subordinate legislation has been set at 16 May 2024.
