ato logo
Search Suggestion:

Implementation of a global minimum tax and a domestic minimum tax

The Government announced it will implement key aspects of Pillar Two of the OECD/G20 Two-Pillar Solution.

Last updated 24 March 2024

Pillar Two

On 9 May 2023, as part of the 2023–24 BudgetExternal Link, the Government announced it will implement key aspects of Pillar Two of the OECD/G20 Two-Pillar Solution to address the tax challenges arising from digitalisation of the economy.


Proposed changes include a:

  • 15% global minimum tax for large multinational enterprises with the    
    • Income Inclusion Rule applying to years starting on or after 1 January 2024, and
    • Undertaxed Profits Rule applying to years starting on or after 1 January 2025.
  • 15% domestic minimum tax applying to years starting on or after 1 January 2024.

On 21 March 2024, the Commonwealth Treasury released the exposure draft materials consisting of:

Treasury is seeking stakeholders’ views on:

  • the exposure draft primary legislation, subordinate legislation and accompanying explanatory material
  • priority issues that would inform the ATO’s administrative approach and public advice and guidance on this measure
  • interactions between the exposure draft primary legislation and provisions in Australia’s existing income tax law as outlined in the discussion paper

Comments can be submitted to Treasury until 16 April 2024 on the primary legislation and discussion paper and until 16 May 2024 on the subordinate legislation .

Although the rules will apply to in-scope MNE groups from 1 January 2024, the measure is not yet law in Australia.

In-scope multinational entities (MNE)

The global minimum tax and domestic minimum tax will:

  • apply to large MNEs with annual global revenue of EUR750 million or more
  • be based on the OECD Global Anti-Base Erosion (GloBE) Model Rules, which are designed to ensure MNEs pay an effective minimum level of tax on the income arising in each jurisdiction where they operate.

Global and domestic minimum tax

A global minimum corporate tax rate of 15% prevents a ‘race to the bottom’ on corporate tax rates, and protects our corporate tax base. The global minimum tax rules would allow Australia to apply a top up tax on a resident multinational parent or subsidiary company where the group’s income is taxed below 15% overseas.

A domestic minimum tax would give Australia first claim on top-up tax for any low-taxed domestic income. In a small number of instances, a large multinational company’s effective Australian tax rate may fall below 15%. In these instances, the domestic minimum tax applies so that Australia collects the revenue that would otherwise have been collected by another country’s global minimum tax.

The ATO will develop systems to enable MNEs to lodge the GloBE Information Return (GIR) and pay any arising top-up tax liabilities payable in Australia to the ATO.

Prepare for the changes

The ATO has been running consultation meetings on the implementation of a global minimum tax and domestic minimum tax. The ATO undertook a total of 25 consultation meetings in relation to the administrative aspects of the implementation of global minimum tax and domestic minimum tax with MNEs, industry groups, advisors and Digital Service Providers (DSPs).

In December 2023, the ATO commenced consultations with DSPs by establishing a working groupExternal Link. The consultation with DSPs is continuing.

Key consultation feedback and findings

The overarching theme from consultations so far includes:

  • the varying degrees of readiness for commencement of the rules
  • the significant compliance challenge the GloBE rules pose, and
  • the potential technical difficulties in capturing the data points the GIR requires.

Capturing data points for the GIR

The feedback received so far indicates, that for many MNE groups:

  • the data points needed for the GIR are extensive and may require system changes or manual interventions
  • given the system updates needed, one key challenge for businesses is the amount of time and resources required to set up their systems to meet their obligations.

Australian specific administration and interpretation issues

Stakeholders raised a variety of topics about the ATO's administration and interpretation of the GloBE rules, when enacted, including:

  • potential application of penalties,
  • safe-harbours, with several consultees indicated that there will likely be significant reliance on OECD safe harbours, and
  • interpretation questions relating to potential Australian income tax regime interactions.

In some instances, there was a misconception that the ATO will be able to provide further concessions and simplifications beyond the OECD’s model rules to reduce compliance costs. It was communicated to consultees that, to ensure qualified status, the ATO is unable to provide administrative concessions or simplifications that are inconsistent with those provided for in the OECD Model Rules, Commentary and Administrative Guidance.

These topics can be explored further in future consultations on the ATO's administration after draft legislation is released. Several consultees indicated that they were seeking to review the legislation and Explanatory Memorandum before identifying potential topics in respect of the ATO's administration and technical interpretation.

Advisors support

Several advisors:

  • have built internal capability for this new measure
  • are advising clients in advance of:
    • the start date of impact assessments, and
    • understanding data needs for the GIR.

Even though there are certain third-party tools on the market to assist with core and safe harbour calculations, select large advisory firms are developing their own inhouse modelling tools to gather data points and establish a rules database.

Support and assistance to comply with the new rules

There is likely to be a need for the ATO to assist in-scope MNEs with meeting future obligations, including:

  • guidance on the ATO’s client engagement approach and Australian specific administration and interpretation issues
  • application and administration of any associated penalties
  • dedicated contact to assist with queries.

More information

You can direct questions about our administration of the global minimum tax and domestic minimum tax to