OECD Pillar Two and the 15% global minimum tax
Pillar Two of the OECD/G20 BEPS project sets a 15% minimum effective tax rate for multinational groups with consolidated revenue of EUR 750 million or more, computed jurisdiction by jurisdiction under the GloBE Model Rules of December 2021. It is collected through an income inclusion rule at the parent, a backstop undertaxed profits rule, and, where a country enacts one, a qualified domestic minimum top-up tax that keeps the revenue at home. The rules are a model: they bind only where a country has enacted them.
Key facts
| Minimum rate | 15% effective rate per jurisdiction |
|---|---|
| Scope | Groups with consolidated revenue of EUR 750 million or more in two of the four preceding years |
| Mechanisms | Income inclusion rule (IIR), undertaxed profits rule (UTPR), qualified domestic minimum top-up tax (QDMTT) |
| Substance carve-out | Excludes a percentage of payroll and tangible assets from the top-up base |
| Safe harbours | Transitional CbCR safe harbour, QDMTT safe harbour |
| Enacted in the GCC | UAE, Bahrain, Qatar, Kuwait and Oman, all from 1 January 2025 |
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How the top-up is computed
For each jurisdiction the group aggregates the GloBE income and adjusted covered taxes of its constituent entities, derives an effective tax rate, and applies the shortfall below 15% to the excess profit after the substance-based income exclusion. Deferred tax, timing differences and loss years are handled by elections and recapture rules that the commentary and administrative guidance explain at length.
Where the GCC stands
The UAE, Bahrain, Qatar, Kuwait and Oman have each enacted a domestic minimum top-up tax for financial years beginning on or after 1 January 2025, so a group's GCC profit is topped up locally rather than at the parent. Saudi Arabia had not enacted Pillar Two as at the review date of this page. Each country's own guide on this site covers its rules.
Frequently asked questions
- Who is within scope of Pillar Two?
- Multinational groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding financial years.
- Which GCC countries have adopted Pillar Two?
- The UAE, Bahrain, Qatar, Kuwait and Oman, each with a domestic minimum top-up tax from 1 January 2025.
Primary sources
- OECD — Global minimum tax (Pillar Two)
- Organisation for Economic Co-operation and Development (OECD)
Related guides
Disclaimer: This page provides general tax information based on publicly available primary sources, reviewed on the date shown. Rules are conditional and change; the page may not reflect a change made after that date, and it is not a substitute for advice from a qualified tax professional on your specific situation.