The UK’s Pillar Two Multinational Top-up Tax (MTT) rules recognise certain foreign income inclusion rules (IIR) and domestic top-up taxes as “qualifying” if they align with OECD standards. To provide clarity, the government introduced regulations on 31 March 2025, listing qualifying jurisdictions and domestic top-up taxes under these rules.
These Regulations specify territories as Pillar Two territories, and taxes as qualifying domestic top-up taxes and accredited qualifying domestic top-up taxes, in support of the implementation and operation of the Organisation for Economic Co-operation and Development/G20 Inclusive Framework’s Pillar Two model rules.
Regulations 2, 3, and 4 have effect from a date before these Regulations commence. This is authorised by sections 241(3), 256(4) of, and paragraph 2(1C) of Schedule 16A to, the Finance (No. 2) Act 2023.
Regulations 2, 3, and 4 give effect to the Schedules which provide as follows:
- The table in Schedule 1 lists territories specified as Pillar Two territories along with the date from which they are specified as such,
- The table in Schedule 2 lists the taxes specified as qualifying domestic top-up taxes along with the date from which they are specified as such, and
- The table in Schedule 3 lists the qualifying domestic top-up taxes that are accredited for the purposes of an election in accordance with Schedule 16A to the 2023 Act along with the date from which they are so accredited.
Regulations 2, 3 and 4 also provide for Commissioners for His Majesty’s Revenue and Customs to specify further territories as Pillar Two territories, and taxes as qualifying domestic top-up taxes and accredited qualifying domestic top-up taxes, by way of notice.
Public notices made under this instrument will be published on the website at https://www.gov.uk/government/collections/multinational-top-up-tax-and-domestic-top-up-tax.
