The OECD Pillar Two agreement aims to implement a global minimum corporate tax rate of 15%.
- This minimum effective tax rate applies to large multinational enterprises (MNEs) with annual revenues over €750 million, ensuring they pay a minimum level of tax on income in every jurisdiction where they operate.
- Goal: Prevent multinational corporations from shifting profits to low-tax jurisdictions.
- Mechanism: If an MNE’s effective tax rate (ETR) in a country is below 15%, a top-up tax is applied to bring it up to the 15% rate.
- Status: The rules began coming into effect in 2024 and are part of a broader Two-Pillar solution to reform international taxation.