Draft guidance on Multinational Top-up Tax and Domestic Top-up Tax

HMRC has published further draft guidance on Multinational Top-up Tax and Domestic Top-up Tax in advance of implementation on 31 December 2023.

Multinational Top-up Tax is a new tax on multinational groups with annual revenue of €750m or more. A top-up tax may be charged on UK parent members when a subsidiary is located in a non-UK jurisdiction, and the group’s profits arising in that jurisdiction are taxed at a rate below the minimum effective tax rate of 15%.

Domestic Top-up Tax applies the rules of Multinational Top-up Tax to the UK operations of groups and certain entities, to ensure that UK entities will be taxed at the minimum rate.

This release of draft guidance updates the previously-released pages on chargeability, scope, and administration. It also includes a new section on calculating the effective tax rate, and new pages which cover the application of Multinational Top-up Tax and Domestic Top-up Tax to particular types of entity.

HMRC invites comments from stakeholders on this draft guidance.

HMRC will publish a complete draft version of the guidance manual in due course. This will include a section on determining top-up tax amounts (covering chapters 6-8 of Part 3 of Finance (No.2) Act 2023), further guidance relating to particular types of entity and structure, and updated versions of the pages of draft guidance published here.