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Global and domestic minimum tax

The implementation of Pillar Two of the OECD/G20 Two-Pillar Solution for multinational businesses in Australia.

Last updated 23 December 2024

Pillar Two implementation in Australia

Australia has implemented the Global Anti-Base Erosion Model RulesExternal Link (GloBE Rules) by introducing a global and domestic minimum tax.

The GloBE Rules provide for a coordinated system of taxation intended to ensure multinational enterprise groups (MNE groups) are subject to a global minimum tax rate of 15% in each of the jurisdictions where they operate. They are a key part of the Organisation for Economic Co-operation and Development (OECD)/G20 Two-Pillar SolutionExternal Link, to address the tax challenges arising from the digitalisation of the economy.

On 10 December 2024, primary legislation that implements the framework of the GloBE Rules in Australia received royal assent. The primary legislation also makes consequential amendments. These amendments include provisions necessary for the administration of top-up tax within the existing tax administration framework, consistent with the GloBE Rules.

On 23 December 2024, subordinate legislation containing the detailed computational rules was registered as a legislative instrument. This means the subordinate legislation is now in force, noting it is subject to the standard parliamentary process for legislative instruments, including a disallowance period.

The global and domestic minimum tax comprises of:

  • a global minimum tax which consists of 2 interlocking rules
    • the Income Inclusion Rule (IIR) – acts as the primary rule which allows Australia to apply a top-up tax on multinational parent entities located in Australia if the group's effective tax rate in another jurisdiction is below 15%
    • the Undertaxed Profits Rule (UTPR) – acts as a backstop rule which allows Australia to apply a top-up tax on constituent entities located in Australia if the group's effective tax rate in another jurisdiction is below 15% and where the profit is not brought into charge under an IIR
  • a domestic minimum tax, which operates consistently with the GloBE Rules and provides Australia the ability to claim primary rights to impose top-up tax over any low-taxed profits in Australia, in priority over the IIR and UTPR.

The IIR and the domestic minimum tax will apply to fiscal years starting on or after 1 January 2024. The UTPR will apply to fiscal years starting on or after 1 January 2025.

The primary legislation can be found here:

The subordinate legislation can be found here:

ATO guidance

We are currently considering the need for guidance products to support the new measure, along with whether there is a need to update existing guidance.

As part of ongoing ATO consultationExternal Link, we have been seeking feedback on guidance that will most usefully support implementation of the new measure and will continue to seek feedback as Australia's implementation of Pillar Two progresses.

You can also contact us if you have any feedback on priority issues for public advice and guidance.

Engaging with us for advice

Contact us about Pillar Two

You can direct questions about our administration or operation of the Australian global and domestic minimum tax to Pillar2Project@ato.gov.auExternal Link.

Private ruling applications

Taxpayers can apply for a private ruling regarding the application of a relevant provision of a tax law relating to the global and domestic minimum tax.

The Commissioner of Taxation may decline to provide a ruling in respect of the global or domestic minimum tax in certain circumstances.

The explanatory memorandum provides some examples of situations where the Commissioner may determine it is unreasonable to provide a private ruling, including where:

  • the OECD Inclusive Framework has published new Administrative GuidanceExternal Link which Australia is planning on incorporating into domestic law but has not yet done so
  • the OECD Inclusive Framework has identified an issue which requires Administrative Guidance, or is drafting Administrative Guidance on a GloBE or domestic minimum tax issue, and has yet to publish an agreed version of that Administrative Guidance
  • issuing a ruling would require assumptions to be made on how other jurisdictions apply their respective domestic rules implementing the GloBE Rules and domestic minimum tax.

If you are considering applying for a private ruling, we encourage you to contact our mailbox at Pillar2Project@ato.gov.auExternal Link before submitting a private ruling or early engagement application. This will allow us to facilitate preliminary discussions, where we will work with you to identify and clarify the issues and determine the most appropriate form of advice.

OECD guidance materials

OECD guidance materials are intended to promote a consistent and common interpretation of the GloBE Rules to provide certainty for MNE groups and to facilitate coordinated outcomes under the rules:

OECD guidance materials released to date include

More information

For more information, see:

When and who the Pillar Two rules apply to

Work out how the Pillar Two global and domestic minimum tax rules apply.

Lodging paying and other obligations for Pillar Two

Pillar Two obligations, including returns, payment and key dates.

Pillar Two consultation

Key Pillar Two consultation feedback and findings and future consultations.

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