Pillar Two (global minimum tax)
Pillar Two is the OECD/G20 global minimum tax. It ensures that multinational groups with revenue above €750m face a minimum effective tax rate of 15% in every country where they operate, through a system of top-up taxes. It works through the GloBE rules: an Income Inclusion Rule, which lets a parent company's country charge a top-up when a subsidiary is taxed below 15%, and an Undertaxed Profits Rule as a backstop. The UK brought in both its Multinational Top-up Tax and a domestic top-up (QDMTT) from 2024. The OECD projects Pillar Two will raise an extra US$155-192bn in corporate tax a year, about 6.5-8.1% of current global receipts, and cut the share of profit taxed below 15% from about 36% to about 7%.
ByLoopholeKiln EditorialPublished
Figures current as of·Corrections
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Example: a group earns profit in a country taxing it at 12.5%; under Pillar Two an extra 2.5% top-up is collected to bring the total to 15%.
Why it matters to a small business: Pillar Two applies to groups above €750m in revenue, not to small firms. But its partial rollout, with the US outside the framework, means some large competitors may still pay below 15% on parts of their income.