Following the Gibraltar Parliament's passage of Pillar Two legislation, the resulting Global Minimum Tax Act 2024 (the Act) was enacted on 23 December 2024.

Proposed Pillar Two legislation was first published in a bill on 10 December 2024. For background, see EY Global Tax Alert, Gibraltar publishes proposed legislation for Pillar Two, including Qualified Domestic Top-up Tax, dated 12 December 2024.

The Act includes a Domestic Top-up Tax that first applies to Fiscal Years beginning on or after 31 December 2023 and an Income Inclusion Rule that applies to Fiscal Years commencing on or after 31 December 2024. The Under-Taxed Payments Rule is excluded from the legislation.

The minimum rate for the purposes of the tax is 15%. The amount is to be determined under the Organisation for Economic Co-operation and Development's (OECD's) Base-Erosion and Profit Shifting (BEPS) Model Rules, with certain modifications.

Domestic Top-up Tax (DTT)

The DTT applies to Domestic Constituent Entities and Domestic Joint Ventures located in Gibraltar, as defined by the Pillar Two Model Rules. The DTT also extends to "Wholly Domestic Groups," defined as groups for which the Ultimate Parent Entity and all Constituent Entities are located in Gibraltar.

The DTT does not apply to Investment Entities or Insurance Investment Entities.

A Designated Local Entity is required to file a Global anti-Base Erosion (GloBE) Information Return in Gibraltar on behalf of all Domestic Constituent Entities, Domestic Joint Ventures (JVs) and Domestic JV subsidiaries. However, a GloBE Information Return does not need to be filed in Gibraltar if a GloBE Return has been filed in a jurisdiction that has a Qualifying Competent Authority Agreement in effect with Gibraltar. In that case, a notification would be required to be filed in Gibraltar no later than three months prior to the filing due date for the Return.

Income Inclusion Rule (IIR)

The IIR applies to an Ultimate Parent Entity, Intermediate Parent Entity or Partially Owned Parent Entity, determined in line with the Pillar Two Model Rules.

An Ultimate Parent Entity or Designated Filing Entity is required to file a GloBE Information Return on behalf of the Multinational Enterprise (MNE) Group. However, a GloBE Information Return is not required to be filed in Gibraltar if such a Return has been filed in a jurisdiction that has a Qualifying Competent Authority Agreement in effect with Gibraltar. In that case, a notification would be required to be filed in Gibraltar no later than three months prior to the filing due date for the Return.

Filing and payment deadlines

The filing deadline for the first Fiscal Year that the MNE Group is subject to the Act is the 18th month following the end of the Fiscal Year, provided that the group has not been required to file a GloBE Information Return in another jurisdiction for a previous year. Otherwise, the filing deadline is the last day of the 15th month following the end of the Fiscal Year.

The DTT is payable on or before the due date for filing the GloBE Information Return.