On 31 May 2023, the Dutch Government submitted a draft legislation to the Parliament in order to incorporate the BEPS 2.0 – Pillar Two requirements into its domestic laws. This draft legislation follows the previously released draft proposal of 24 October 2022, which underwent a public consultation process. The proposed legislation is designed as a separate tax law and is not intended to be integrated into the existing Dutch Corporate Income Tax Code.
The Dutch proposal is based on the European Union (EU) Directive issued on 14 December 2022, which aims to implement the OECD Pillar Two agreement within the EU. EU Member States have until 31 December 2023, to incorporate the provisions of this Directive into their respective national legislations.
OECD BEPS 2.0 – Pillar Two rule aims to implement a global minimum effective tax rate of 15% for businesses falling within its scope. It primarily comprises two interconnected domestic regulations i.e., the Income Inclusion Rule (IIR) and the Undertaxed Payment Rule (UTPR). These rules are collectively known as the Global Anti-Base Erosion (GloBE) rules.
In accordance with the EU Directive, the Dutch Government has put forward a proposal to enforce the IIR and UTPR for financial reporting years commencing on or after 31 December 2023 and 31 December 2024 respectively.
