Legislation – Finance Act 2025

“(1A)

Regulations may provide for the specification of a territory to be made by notice published by the Commissioners for His Majesty’s Revenue and Customs in accordance with the regulations.”,

(c)

in subsection (2)—

(i)

after “Regulations” insert “, or a notice,”, and

(ii)

for “Treasury consider” substitute “appropriate authority considers”,

(d)

after that subsection insert—

“(2A)

The “appropriate authority” means—

(a)

in relation to the specification of a territory in regulations, the Treasury, or

(b)

in relation to the specification of a territory made by notice, the Commissioners for His Majesty’s Revenue and Customs.”,

(e)

in subsection (3)—

(i)

for “that”, in the first place it occurs, substitute “for”,

(ii)

omit “is”,

(iii)

for “the regulations are made”, in the first place it occurs, substitute “the territory was specified”, and

(iv)

for “that the specification of a territory previously specified ceases to have effect” substitute “for the specification of a territory to cease to have effect in relation to accounting periods commencing”, and

(f)

after that subsection insert—

“(4)

A territory outside the United Kingdom is to be treated as a Pillar Two territory for the purposes of any accounting period that concluded before the first regulations under this section have been made, if it is a territory in which a tax applies for that accounting period—

(a)

that is a Qualified IIR for the purposes of the Pillar Two rules, or

(b)

that it is reasonable to conclude is likely to be a Qualified IIR for the purposes of those rules.”

(2)

In section 256 (qualifying domestic top-up tax)—

(a)

in subsection (1)(b), for “a” substitute “, or in accordance with,”,

(b)

after that subsection insert—

“(1A)

Regulations may provide for the specification of a tax to be made by notice published by the Commissioners for His Majesty’s Revenue and Customs in accordance with the regulations.”,

(c)

in subsection (2)—

(i)

after “regulations” insert “, or a notice,”, and

(ii)

for “Treasury consider” substitute “appropriate authority considers”,

(d)

after that subsection insert—

“(2A)

The “appropriate authority” means—

(a)

in relation to the specification of a tax in regulations, the Treasury, or

(b)

in relation to the specification of a tax made by notice, the Commissioners for His Majesty’s Revenue and Customs.”,

(e)

in subsection (4)—

(i)

for “that”, in the first place it occurs, substitute “for”,

(ii)

omit “is”,

(iii)

for “the regulations are made”, in the first place it occurs, substitute “the tax was specified”, and

(iv)

for “that the specification of a tax previously specified ceases to have effect” substitute “for the specification of a tax to cease to have effect in relation to accounting periods commencing”, and

(f)

after that subsection insert—

“(5)

A tax (other than domestic top-up tax which is always a qualifying domestic top-up tax) is to be treated as a qualifying domestic top-up tax for the purposes of any accounting period that concluded before the first regulations under this section have been made if—

(a)

it is a Qualified Domestic Minimum Top-up Tax for that accounting period for the purposes of the Pillar Two rules, or

(b)

it is reasonable to conclude that it is likely to be a Qualified Domestic Minimum Top-up Tax for that accounting period for the purposes of those rules.”

(3)

In Schedule 16A (qualifying domestic top-up tax safe harbour election)—

(a)

in paragraph 1(3)—

(i)

in the words before paragraph (a), for “may only be made” substitute “is only valid”,

(ii)

omit the “and” after paragraph (b), and

(iii)

after that sub-paragraph insert—

“(ba)

the accreditation applies to the accounting period, and”, and

(b)

in paragraph 2—

(i)

the existing text becomes sub-paragraph (1),

(ii)

in that sub-paragraph, before “regulations” insert “, or in accordance with,”,

(iii)

after that sub-paragraph insert—

“(1A)

Regulations may provide for the accreditation of a tax by specification in a notice published by the Commissioners for His Majesty’s Revenue and Customs in accordance with the regulations.

(1B)

Regulations, or a notice, must identify the accounting periods to which the accreditation applies.

(1C)

Regulations under this paragraph may provide for the accreditation of a tax to have effect from a time before the tax was specified (but may not provide for the accreditation of a tax to cease to have effect in relation to accounting periods commencing before the regulations are made).”, and

(iv)

at the end insert—

“(2)

A qualifying domestic top-up tax is to be treated as accredited for the purposes of any accounting period that concluded before the first regulations under this paragraph have been made if—

(a)

the tax falls within Chapter 5.5 to 5.7 of the QDMTT safe harbour guidance, or

(b)

it is reasonable to conclude that the tax is likely to fall within Chapter 5.5 to 5.7 of that guidance.

(3)

For the purposes of sub-paragraph (2) the “QDMTT safe harbour guidance” means Chapter 5 of Tax Challenges Arising from the Digitalisation of the Economy – Administrative Guidance on the Global Anti-Base Erosion Model Rules (Pillar Two), July 2023, published by the OECD on 17 July 2023.”

(4)

The amendments made by sub-paragraphs (1)(f), (2)(f) and (3)(b)(i) and (iv) are treated as having come into force on 7 November 2024.