BEPS Pillar Two introduces a 15% global minimum tax on multinational enterprise (MNE) groups with annual consolidated revenue of EUR 750 million or more, through the GloBE rules. Where group profits in a jurisdiction are taxed below 15%, a top-up tax is collected via the Income Inclusion Rule, UTPR or a domestic minimum top-up tax.
The 15% global minimum tax
Pillar Two of the OECD/G20 BEPS project sets a 15% minimum effective tax rate for in-scope MNE groups, computed jurisdiction by jurisdiction using the GloBE (Global Anti-Base Erosion) rules. The aim is to reduce profit shifting to low-tax jurisdictions by ensuring a floor on the effective rate wherever the group operates.
The mechanisms
| Rule | How it collects the top-up |
|---|---|
| Income Inclusion Rule (IIR) | Parent entity pays top-up on low-taxed foreign profits |
| Undertaxed Profits Rule (UTPR) | Backstop denying deductions/allocating top-up where IIR does not apply |
| Qualified Domestic Minimum Top-up Tax (QDMTT) | The source country collects its own top-up first |
India's position
Many jurisdictions began applying Pillar Two from 2024. India had not, as of the latest position known, enacted domestic Pillar Two legislation, though it is an active participant in the framework and a QDMTT/IIR is under consideration. Indian-headquartered MNE groups in scope are nonetheless affected by other countries' rules, and Indian subsidiaries of foreign groups may face top-up computations abroad. India has not yet enacted domestic Pillar Two (GloBE) rules as of June 2026. MNE groups with Indian entities may face top-up tax in other jurisdictions that have enacted Pillar Two. India's current enactment status.
What in-scope groups should do
- Confirm whether the group meets the EUR 750 million revenue threshold.
- Compute jurisdictional effective tax rates under GloBE, considering Indian incentives (SEZ, concessional 115BAA) that may lower the ETR.
- Assess exposure to IIR/UTPR/QDMTT in each country of operation.
- Upgrade data systems for GloBE reporting and the GloBE Information Return.
Key takeaways
- Pillar Two: 15% global minimum tax for EUR 750m+ MNE groups.
- Top-up collected via IIR, UTPR or a domestic QDMTT.
- India's domestic enactment status should be verified.
- Indian incentives can lower the GloBE effective tax rate.