Taxes Consolidation Act 1997 section 111AK

Transitional UTPR safe harbour

Section 111AK provides a transitional safe harbour from the Undertaxed Payments Rule (UTPR), allowing the top-up tax for low-taxed entities located in the ultimate parent entity's jurisdiction to be treated as zero where that jurisdiction's corporate income tax rate is at least 20 per cent.

• The safe harbour applies during a transition period covering fiscal years of up to twelve months that begin on or before 31 December 2025 and end before 31 December 2026.
• Where the jurisdiction of the ultimate parent entity has a nominal corporate income tax rate (including sub-national taxes) of 20 per cent or more, the top-up tax for low-taxed entities in that jurisdiction is deemed to be zero.
• The election is made by the filing constituent entity and applies to all low-taxed constituent entities of the MNE group or joint venture group members located in the ultimate parent entity's jurisdiction.
• A filing constituent entity cannot elect both the Transitional CbCR Safe Harbour and the Transitional UTPR Safe Harbour for the same jurisdiction in the same fiscal year.

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