Pillar Two: Global Minimum Taxation

Overview of Pillar Two /Background Facts

On 20 December 2021, the OECD/G20 Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS) released the Model Global Anti-Base Erosion (GloBE) rules (Model Rules) under Pillar Two aiming to ensure that income is taxed at an appropriate rate. These Model Rules set forth the "common approach" for a Global Minimum Tax at 15% for multinational enterprises with a turnover of more than EUR750 million and provide for several complicated mechanisms to ensure this tax is paid. The rules are complex and will require substantial new forms of financial data that tax departments may not currently have access to within their organization.

The aim is purported to be achieved through the application of two interlocking rules (the GloBE rules):