On 1 December 2023, the Czech Senate passed a law to enforce the Pillar 2 global minimum tax under Council Directive (EU) 2022/2523 of 14 December 2022. On 27 October 2023, the law was approved by the Chamber of Deputies. On 30 August 2023, the Ministry of Finance of the Czech Republic announced the introduction of a draft law to implement the Pillar 2 global minimum tax rule.
The law includes the incorporation of the Pillar 2 income inclusion rule (IIR) and the undertaxed payment/profit rule (UTPR) to establish a minimum tax rate of 15% for multinational enterprise (MNE) groups that have annual consolidated revenue of at least EUR 750 million in a minimum of two out of the previous four fiscal years. The law also includes the introduction of a qualified domestic minimum top-up tax (QDMTT) for members of in-scope groups, as well as permanent and transitional safe harbor rules.
The law must be signed by the president and published in the Official Gazette to enter into force. The IIR and QDMTT will apply for fiscal years beginning on or after 31 December 2023, while the UTPR will apply for fiscal years beginning on or after 31 December 2024.
However, the UTPR will apply for fiscal years beginning before 31 December 2024 in respect of groups whose ultimate parent entity is resident in a Member State that has elected to not defer the application of the IIR and UTPR for six consecutive fiscal years beginning from 31 December 2023, as allowed by the Directive.
