The affected calendar year taxpayers have already passed the first global minimum tax obligation, i.e. they have fulfilled the reporting obligation using the GLOBE form. However, barely a few weeks have passed and the latest global minimum tax changes are already here, which could have a significant impact on the lives of some multinational groups.
Global minimum tax changes due to the US
On 20 January 2025, the day of his inauguration, Donald Trump, the new US President, announced that the Global Tax Deal – of which the Global Minimum Tax Agreement is a part – will no longer apply in the US.
The previous US presidency attended the G7 and G20 summits in support of the Global Minimum Tax, and eventually negotiated an agreement with nearly 140 countries to adopt the OECD’s minimum tax proposal. However, the local implementation of the new regime has so far been achieved in a small number of countries. Despite President Biden’s support for the introduction of a global minimum tax, he failed to secure sufficient congressional support to implement the minimum tax in the US.
President Trump has now made clear in his executive order that the US is withdrawing its support for the Global Minimum Tax agreement, which would have allowed countries that had introduced a minimum tax to impose an additional tax on US multinationals.
America’s withdrawal from the global minimum tax system raises a number of issues, including the taxation of US multinationals abroad. The Trump administration plans to impose punitive taxes if a country tries to tax a US company under the UTPR (Undertaxed Payments Rule). On the other hand, it is questionable how other major economies that have not implemented the minimum tax rules (e.g. India, China) will react to this decision.
Hungary on the transitional qualifying list
Among the global minimum tax changes at the beginning of the year, the next recent news is that on 15 January, the OECD released the list of jurisdictions with transitional qualified status for the purposes of the Income Inclusion Rule (IIR) and the Qualified Domestic Minimum Top-up Tax Rules and QDMTT Safe Harbours.
In its qualification, the OECD assesses whether the legislation of each jurisdiction is in line with the common international set of rules for the global minimum tax. The Hungarian Minimum Tax Act has been granted qualified status on a temporary basis for the collection of QDMTT and IIR type additional taxes. In practice, this means that the domestic minimum top-up tax introduced in Hungary will be qualified for the year 2024.
This is also important because if the domestic minimum top-up tax regime in Hungary were not to be classified as qualified, the calculation based on the IIR mechanism in the country of the parent company may result in an additional top-up tax liability for the Hungarian group members. On the other hand, it is also an administrative relief for the parent company, as they do not need to make additional top-up tax calculations for the Hungarian group members.
The next step for the countries introducing the minimum tax would be to perform peer review about each other’s domestic top-up tax systems.
Global minimum tax changes affecting the reporting
The third new feature of the global minimum tax changes is the updated minimum tax return, the so-called GIR (GloBE Information Return), which was also published on 15 January. The new GIR contains useful information for both taxpayers and tax administrations. To further assist tax administrations, the OECD has also published an XML schema based on the new GIR, which countries are expected to use for mutual data exchange. The first deadline for taxpayers concerned to file their returns will be 30 June 2026.
A draft Multilateral Competent Authority Agreement (MCAA) has also been published in connection with the GIR return. This agreement aims to facilitate the central registration of GIR and the exchange of data between countries by regulating at global level the conditions and functioning of the automatic exchange of GIR information. In practice, this is a significant additional administrative relief for taxpayers, since if the ultimate parent company or designated filing entity files a GIR return in a country that has acceded to the MCAA, it is no longer necessary to file a GIR return in Hungary. The next expected step in the global minimum tax changes will be the adoption of the DAC9 Directive, which is currently being worked on at EU level. The DAC9 Directive has similar objectives as the MCAA, but only concerns EU Member States.
The administrative guidelines have also been extended
As part of the January “global minimum tax publication package”, the OECD published new administrative guidance on the application of the transitional rules in Article 9.1 of the Model Rules. The guidelines provide further clarification on the treatment of deferred tax assets created in the transition year.
Given that the top-up tax liability is already required to be included in the 2024 financial statement, the Hungarian companies concerned will have to perform the global minimum tax calculation shortly. The tax advisors at WTS Klient Hungary will be happy to assist you with the calculation and any other questions related to the global minimum tax changes. As part of our tax planning and consulting services, we not only explain the details of the rules, but also develop the most optimal solutions tailored to your company. Contact us with confidence!
This article provides general information and does not constitute advice.
