Client's portal


PART 3: New rule in the Pillar 2 measures regarding “Qualified Domestic Minimum Top-up Taxes”


In this present issue in the series of articles we promised to publish on GMT, we will examine the implications of a new rule in the Pillar 2 model rules regarding ‘Qualified Domestic Minimum Top-up Taxes’ (QDMTTs) which would take priority over the global minimum tax under the OECD’s global anti base erosion regime.

Under the OECD’s global anti-base erosion (GLoBE) rules, countries will tax the income of multinational enterprises if other countries have not exercised their primary taxing rights over that income. However, following discussions and agreement at the level of the BEPS Inclusive Framework, the OECD has agreed to allow the non-exercising countries to preserve their taxing rights by adopting QDMTTs, which are in effect domestic minimum taxes with the same design as the GLoBE rules. In a recent OECD publication on the Pilar 2 model rules it is clarified that the amount payable under a domestic minimum tax will be credited against the GLoBE top-up taxes on the relevant income which means that the domestic minimum taxes will take priority over the global minimum tax.

Definition of QDMTT per Article 10 of the OECD Pillar 2 model rules

Qualified Domestic Minimum Top-up Tax means a minimum tax that is included in the domestic law of a jurisdiction and that:

  • determines the Excess Profits of the Constituent Entities located in the jurisdiction (domestic Excess Profits) in a manner that is equivalent to the GloBE Rules;
  • operates to increase domestic tax liability with respect to domestic Excess Profits to the Minimum Rate for the jurisdiction and Constituent Entities for a Fiscal Year; and
  • is implemented and administered in a way that is consistent with the outcomes provided for under the GloBE Rules and the Commentary, provided that such jurisdiction does not provide any benefits that are related to such rules.

The model rules also specify that a QDMTT may compute domestic Excess Profits based on an Acceptable Financial Accounting Standard permitted by the Authorised Accounting Body or an Authorised Financial Accounting Standard adjusted to prevent any Material Competitive Distortions, rather than the financial accounting standard used in the Consolidated Financial Statements.

Benefits from adopting a global domestic minimum tax

Immediately after the publication of the OECD GLoBE model rules, the European Commission proposed a directive (Com (2021) 823 final) for the implementation of Pillar 2 by EU States. In its explanatory memorandum the European Commission describes the QDMTT “as a measure that would preserve sovereignty and allow its member States to collect additional tax revenue from their domestic entities”.

There are indications that many countries are seriously considering adopting QDMTT. For example, Singapore has in February 2023 announced in its Budget speech its intention “to implement Pillar 2 measures in 2025, as part of a broader international effort to align minimum global corporate tax rates for large MNE groups, as well as a Domestic Top-up Tax, which will raise the effective tax rate for MNE groups in Singapore to 15%”. In its 2022-23 Budget Speech, Hong Kong announced that “it considers introducing a domestic minimum top-up tax with regard to large MNEs groups with global turnover of at least 750 million Euros starting from the year of assessment 2024-25 to ensure that their effective tax rates meet the global minimum effective tax rate of 15 per cent so as to safeguard Hong Kong’s taxing rights.” The Malaysian Government in its 2023 Budget speech stated the following:

“To enable Malaysia to broaden its tax base while remaining competitive in attracting foreign direct investment, the Government will introduce a minimum effective tax rate globally as recommended under Pillar 2 of the BEPS Action Plan and intend to implement the Qualified Domestic Minimum Top-up Tax after further research is made and targeted in 2024.”

In June 2022, the Swiss federal government introduced its roadmap to implement the GloBE Rules into domestic legislation, which would make the GloBE Rules applicable as of January 1, 2024. Most recently, on December 16, 2022, the Swiss parliament passed an amendment to the Swiss constitution, which is subject to a popular vote that is scheduled for June 18, 2023. If the referendum passes, the federal government can continue with the implementation plan. It is expected that the Swiss implementation of the GloBE Rules will correspond to the EU directive’s intention to apply the income inclusion rule (IIR) and a qualified domestic minimum top-up tax (QDMTT) for financial years starting on or after January 1, 2024.

On 9 May 2023, as part of the 2023-24 Budget, the Australian Government announced it will implement 15% global minimum tax including QDMTT applying to income years starting on or after 1 January 2024. The UK is also considering the possibility to implement the QDMTT and has started a consultation process.

Following announcement made in last year’s Budget Mauritius introduced the QMDTT under its local law. Section 4 (Imposition of tax) has thus been amended to add a new sub-section (3) which reads as follows:

“Notwithstanding the other provisions of this Act, a company forming part of an MNE group which is liable to a Top-up Tax in a year may be required by the Director-General to compute and pay a Qualified Domestic Minimum Top-up Tax in such form and manner as may be prescribed.”

The introduction of the Mauritius domestic minimum tax was a good decision as it will ensure that any top-up tax due from entities located in Mauritius will be paid directly to the Mauritius Revenue Authority. Moreover, collection of this tax via a Mauritius Domestic Minimum Tax will, in our view, significantly reduce compliance burdens for multinational groups by preventing them from being subject to top-up taxes in other countries in respect of their Mauritius operations. However, this measure will only come into effect after the issue of the prescribed Income Tax Regulations which will have to be based on the OECD Anti-Base Erosion Model Rules. In this year’s Budget no mention has made of the Global Minimum Tax and the Government has not yet provided a timeline for the implementation of the QDMTT. The delay in implementing the QDMTT may result in Mauritius enterprises of impacted multinational groups being subject to top-up taxes in countries that have opted for early adoption of the OECD Pillar 2 GLoBE Rules.


Although Mauritius does not harbour a lot of large MNEs, several companies in Mauritius will definitely be affected by GMT and with the transition into a new global system of taxation, it is very important for MNE groups in scope of the rules to monitor developments in the jurisdictions in which they operate.



Head of Tax Advisory Services Dept

T. +230 52584751

Client Risk Assessment​

• Digitalised Client Screening, profiling and enhanced due

FATCA/CRS Reporting​

Assistance to comply with US Foreign Account Tax
Compliance Act (FATCA) & OECD Common Reporting
Standards (CRS):

• Apply the prescribed due diligence rules and completing the
‘Self-Certification’ exercise;

• Design and implement internal processes and procedures to
ensure compliance under FATCA/CRS;

• Assist in compiling, assessing, validating and reporting the
reportable information under FATCA/CRS to the competent
authorities in XML format.

Independent compliance audit​

• Run an independent onsite AML / CFT audit

• Run a Consultancy and Project Development programme

Training and Refresher Courses

• AML / CFT Risk Management

• Data Protection Framework

• Legal and Regulatory Updates