Understanding Pillar Two: Your Guide to the New 15% Global Minimum Tax
Understanding Pillar Two: Your Guide to the New 15% Global Minimum Tax What every multinational, tax advisor, and CFO needs to know about the OECD’s sweeping 2025 rules. If your company earns over €750 million a year, you’re officially on the OECD’s radar. Starting in 2025, the 15% global minimum tax isn’t a recommendation — it’s a requirement. This guide breaks down Pillar Two so you’re not blindsided by top-up taxes and surprise audits. 1. What Is Pillar Two, Really? Pillar Two is part of the OECD’s global tax reform package under the Base Erosion and Profit Shifting (BEPS) 2.0 initiative. Its core objective is simple: Ensure large multinationals pay at least 15% effective tax in every jurisdiction they operate in. This global framework is governed by: GloBE Rules (Global Anti-Base Erosion) Threshold: Consolidated revenues ≥ €750 million Two key enforcement mechanisms: Income Inclusion Rule (IIR) Undertaxed Payments Rule (UTPR) Put plainly: If one of your entities pays below ...