Undertaxed Payments Rule

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Tax - profit shifting - Global Minimum Tax - Organisation for Economic Co-operation and Development (OECD) - Pillar 2.

(UTPR).

The Undertaxed Payments Rule - in conjunction with the Income Inclusion Rule (IIR) - ensures that large multinational entities are subject to a global minimum tax rate.

The tax jurisdictions of subsidiary companies in the group collect top-up tax in relation to low-taxed foreign companies in the group where the tax is not paid under the IIR in the tax jurisdiction of the parent company.


Two interlocking rules
"The [Pillar 2] provisions are made up of the following two interlocking rules:
• Income Inclusion Rule (IIR): this is the primary calculation mechanism. The ultimate parent territory collects the top-up tax associated with foreign subsidiaries with an effective tax rate (ETR) below 15%.
• Undertaxed Payments Rule (UTPR): subsidiary territories collect the top-up tax in respect of a low-taxed overseas sister or parent company, where it is not captured by a parent territory IIR."
Graham Robinson, international tax and treasury partner PwC & Iain McDonald international tax and treasury director PwC - The Treasurer, Issue 4 2022 - December 2022, p40.


See also


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