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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 January 2026

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 and is now in force.

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 broadly 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 containing the detailed computational rules can be found here:

Other supporting subordinate legislation including supplementary administrative lodgment rules and the list of jurisdictions with qualified status for the purpose of the IIR and domestic minimum tax can be found here:

ATO guidance

We are continuously 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 consultation, we have been seeking feedback on guidance that will best support implementation of the new measure. We will continue to seek feedback as Australia's implementation of Pillar Two progresses.

To date, we have published Practical Compliance Guideline PCG 2025/4 Global and domestic minimum tax lodgment obligations – transitional approach.

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

Administering potential amendments

The Australian global and domestic minimum tax must be applied consistently with the GloBE RulesExternal Link for Australia to achieve qualification status. This requires maintaining consistent outcomes set out in specific OECD materials, including future publications and how and in what timeframe a jurisdiction addresses identified inconsistencies with its law. These OECD materials are the GloBE Model Rules, Commentary, and agreed Administrative Guidance.

An inconsistency may arise when Australia has yet to implement agreed Administrative Guidance or there has been a minor drafting oversight in the Australian law compared to OECD materials. Any potential amendment to Australian law to address inconsistencies remains a policy decision as a matter for the government and future governments.

As explained in the Explanatory MemorandumExternal Link, the primary legislation includes a rule making power so that future OECD materials can be incorporated efficiently and in a timely manner. This can apply retrospectively to maintain Australia's qualification.

While any decision regarding amendments is a matter for government, we expect future amendments to address inconsistencies may generally have retrospective application where relevant to maintain qualification.

We will apply our usual practical guidance for the administrative treatment of retrospective legislation for taxpayers that anticipate legislative amendments to address these inconsistencies, whether or not there has been a separate formal announcement.

  • Taxpayers can self-assess based on the existing law. Where the amendment to address the inconsistency would increase liabilities, taxpayers will need to amend their returns and pay the increased liability if the law is ultimately changed retrospectively.
  • We will not advise taxpayers to self-assess by anticipating law change to address inconsistencies. However if taxpayers choose to do so, we will not direct our compliance resources to checking whether self-assessments comply with existing law (pre-amendments), in respect of the anticipated law change. Where taxpayers anticipate a change, they should internally document the inconsistency identified between the Australian law and the OECD materials.

Taxpayers should also refer to our related guidance on Lodgment and payment obligations and related interest and penalties, which we will apply in relation to interest and penalties for taxpayers that anticipate legislative amendments to address inconsistencies.

If you identify any inconsistencies between Australian law and the OECD materials, share them with us or Treasury. We may also be able to confirm whether we consider the identified provision is inconsistent with the OECD materials. Contact us to discuss any inconsistencies at Pillar2Project@ato.gov.au.

OECD side-by-side announcement

The OECD has announcedExternal Link an agreement of the Inclusive Framework (IF) on a side-by-side package (Side-by-Side Package [5 January 2026] [PDF, 1.1MB]External Link). The package includes several components, including simplifications, a one-year extension of the transitional CBC reporting safe harbour, a safe harbour dealing with qualified tax incentives, and the introduction of a side-by-side system.

The adoption of the side-by-side package into Australian law is a matter for government. Any proposed retrospective legislative amendments for the side-by-side package will be administered in line with our usual practical guidance as set out above.

A key component of the package is the side-by-side safe harbour which under the IF agreement applies to fiscal years commencing on or after 1 January 2026. The safe harbour is available to MNE groups that have an ultimate parent entity located in a jurisdiction that has a qualified side-by-side regime. The United States is currently the only jurisdiction that the IF has determined as having a qualified side-by-side regime. Under the side-by-side safe harbour, IIR and UTPR top-up tax would be deemed as zero for all constituent entities of an eligible MNE group, as well as in respect of the MNE group's interests in GloBE joint ventures.

The side-by-side safe harbour if enacted would not change the Australian lodgment requirements for fiscal years that commenced in 2024 or 2025, and would only impact lodgment and payment obligations for fiscal years commencing from 1 January 2026 (generally due from March 2028). In addition, the side-by-side safe harbour does not impact the application of Australian domestic minimum tax, or the requirement to lodge Australian DMT tax returns (DMTRs), for any fiscal year.

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.au.

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 MemorandumExternal Link to the primary legislation 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.

We have updated Taxation Ruling TR 2006/11 Private Rulings following the enactment of the Australian global and domestic minimum tax.

If you are considering applying for a private ruling, before submitting a private ruling or early engagement application contact us at Pillar2Project@ato.gov.au. 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 RulesExternal Link to provide certainty for MNE groups and to facilitate coordinated outcomes under the rules.

OECD guidance materials released to date include:

Quick reference guides

We have developed quick reference guides to provide a broad overview of different aspects of the global and domestic minimum tax:

More information

For more information, see:

When and how the Pillar Two rules apply

Work out how the Pillar Two global and domestic minimum tax rules work and when and who they apply to.

Lodging, paying and other obligations for Pillar Two

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

Pillar Two interactions with other provisions

Pillar Two interactions with Australia's existing corporate tax system.

Transitional CBC reporting safe harbour

How to apply the transitional CBC reporting safe harbour available under Pillar Two.

Pillar Two interactions with consolidation

How the Pillar Two rules apply to consolidated groups.

Specific issues for Pillar Two

Specific issues identified by stakeholders via consultation and other channels not covered in other Pillar Two content.

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