Portugal’s Council of Ministers approved Draft Law 21/XVI/1 for implementing the Pillar Two global minimum tax, in line with Council Directive (EU) 2022/2523 of 14 December 2022 on 11 September 2024.
The draft law introduces the Pillar Two income inclusion rule (IIR) and the undertaxed payment/profit rule (UTPR) to ensure a minimum tax rate of 15% for multinational enterprise (MNE) groups with annual consolidated revenue of at least EUR 750 million in at least two of the last four financial years. It also includes provisions for a qualified domestic minimum top-up tax (QDMTT).
Previously, Portugal’s Minister of Finance Joaquim Miranda Sarmento, had announced the approval of the project bill for the transposition of the EU’s Pillar Two Directive.
This decision followed a public consultation period that began on Wednesday, 10 July 2024.
The tax will be applicable from the tax year of 2024, with the first declarations due in 2026.
The government’s approval of the bill meets Portugal’s commitment to adopting the OECD reforms, according to the council’s statement. In October 2021, EU member states and most other participants in the OECD inclusive framework on base erosion and profit shifting reached a preliminary agreement on the two-pillar plan.
