OECD Pillar 2 communications – concerning the Multinational Top-up Tax and the Domestic Top-up Tax

27 Jun 2023

HMRC has made us aware of a communications campaign now underway. This involves a ‘Pillar2’ educational nudge letter concerning UK adoption of Organisation for Economic Cooperation and Development (OECD) Pillar 2 model rules. HMRC has said that we can share this educational communications activity impacting large and top-end mid-sized businesses, as well as the letters. Below is from HMRC:

Background

  • In October 2021, the UK and over 135 other countries agreed as part of the OECD Inclusive Framework to a two-pillar solution to reform the international corporate tax framework in response to the challenges of digitalisation.
  • Pillar 2 of this solution, known as the Global Base Erosion (GloBE) rules, requires a group with consolidated annual revenues of over €750 million to pay a minimum 15% tax on its profits in each jurisdiction it operates in.
  • As part of the UK adoption of the OECD Pillar 2 rules, the government has announced two new taxes, the Multinational Top-up Tax (MTT) and Domestic Top-up Tax (DTT). These will apply to accounting periods that begin on or after 31 December 2023.
  • HMRC are now writing to businesses we believe may be in scope of MTT and DTT, to offer them support as the new taxes are introduced. 

Approach

  • The OTM campaign is being undertaken in a two-stage approach. Customer Compliance Managers (CCMs) have a Large Business version of the letter to share with their customers and are in the process of doing so at a time that was convenient for them when engaging with their customers, but to be done within a 2-week window of w/c 12 June.
  • For Wealthy and Mid-sized Business customers letters have begun to be issued this week and we anticipate these will start ‘door matting’ towards the end of this week and into next.
  • We also wrote out to a number of registered agents (those who represented the most customers in scope) including a draft copy of the letter we sent to businesses, so not every agent/representative would have received this letter.
  • We’ve set up a new Pillar 2 Compliance team. The team will work with the adviser community, to help us understand any problems groups may have, and what action we can take to overcome them.
  • In addition a dedicated mailbox has been established in relation to this activity - [email protected]. Customers without a CCM to engage with directly on this are encouraged to write to us using this email address if:
    • they want to receive future updates by email on Pillar 2 developments, guidance, and event information – this may help their business prepare for the changes.
    • they are not sure whether they will be in scope of MTT and DTT and would like to discuss this with us.
    • their group has received this letter more than once - please let us know so that we can update our records.
  • We also have a number of comms products (Agent Update and MP and Stakeholder Digest) that will be issued externally over the coming weeks referencing the customer letter. The mailbox will also be publicised again in the Agent Update.

The three letters mentioned above can be found at:

Pillar 2 Agent Letter
Pillar 2 LB Customer Letter
Pillar 2 WMBC Customer Letter