The OECD’s Pillar Two framework introduces a global minimum tax regime designed to ensure that multinational enterprises (MNEs) with consolidated annual revenues exceeding EUR 750 million are subject to a minimum effective tax rate of 15% in each jurisdiction in which they operate. Where the effective tax rate (ETR) in a jurisdiction falls below this threshold, a top-up tax may arise to bring the overall taxation of those profits up to the minimum level.
The framework is primarily implemented through two interlocking rules:
- the Income Inclusion Rule (IIR), and
- the Undertaxed Profits Rule (UTPR)
In addition, jurisdictions may introduce a Qualified Domestic Minimum Top-up Tax (QDMTT), allowing them to collect top-up tax locally rather than ceding taxing rights to other jurisdictions. Implementation of these rules is ongoing globally and varies significantly by jurisdiction. While many countries have enacted legislation, others are at differing stages of development, including draft proposals or early policy consideration.
The chart below provides an overview of the status of implementation across jurisdictions participating in the OECD Inclusive Framework, focusing on those that have committed to the Pillar Two initiative and have taken steps toward introducing the rules.
