QDMTT (Qualified Domestic Minimum Top-up Tax)
A Qualified Domestic Minimum Top-up Tax is a domestic top-up tax under Pillar Two that lets the country where low-taxed profit actually arises collect the top-up itself, instead of handing that revenue to the parent company's country under the Income Inclusion Rule. Pillar Two guarantees a 15% minimum rate, but without a QDMTT the top-up on a subsidiary taxed below 15% would be collected abroad, by the parent's country. By enacting a QDMTT, a host country keeps that revenue at home. This is why even traditionally low-tax countries have rushed to introduce one: it is better to collect the top-up than to watch another country take it. The UK has operated a QDMTT alongside its Multinational Top-up Tax since 2024.
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Example: a group earns profit in a country taxing it at 12.5%; with a QDMTT, that country collects the 2.5% top-up to reach 15% itself, rather than the parent's country taking it.
Why it matters to a small business: the QDMTT does not apply to you, but it explains a quiet shift. Low-tax jurisdictions now collect more from large groups, because under Pillar Two the choice is to collect the top-up locally or lose it. The race to the bottom has, on this narrow point, reversed.