The Australian Senate has passed the Taxation (Multinational—Global and Domestic Minimum Tax) Imposition Bill 2024 on 26 November 2024.
The House of Representatives endorsed the bill in August 2024.
This followed after the Australian Senate Economics Legislation Committee released its report recommending the passage of three bills to implement the Pillar Two global minimum tax in Australia.
The legislation included:
- 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.
As mentioned above, The Imposition Bill introduces Pillar Two top-up taxes in Australia, including the Domestic Minimum Tax (DMT), Income Inclusion Rule (IIR), and Undertaxed Profits Rule (UTPR). The DMT and IIR taxes start from fiscal years beginning on or after 1 January 2024, for multinational groups with over EUR 750 million in annual global revenue. The UTPR tax will apply from fiscal years starting on or after 1 January 2025.
The IIR applies by allocating the top-up tax to the Parent Entity generally closest to the top of the corporate structure (the ‘top-down’ approach). The top-up tax relates to LTCEs that are subject to an ETR below the 15% minimum rate in that jurisdiction.
The two other bills, ‘The Assessment Bill’, and, ’The Consequential Bill’ are yet to be passed by the Senate.
The Assessment Bill implements the framework for imposition of top-up tax for the IIR, UTPR and the DMT consistent with the GloBE Rules. The Assessment Bill also implements a domestic minimum top-up tax in respect of Constituent Entities located in Australia that are subject to an ETR below the 15% minimum rate.
The Consequential Bill contains consequential and miscellaneous provisions necessary for the administration of top-up tax, consistent with the existing administrative framework under Australian tax law and the GloBE Rules.
