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Emerging & Next-Gen Compliance

Pillar Two — Global Minimum Tax (GloBE)

Pillar Two / GloBE

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Overview

Pillar Two and GloBE advisory covers the global minimum tax framework of the OECD's Pillar Two — the Global Anti-Base Erosion (GloBE) rules that apply a minimum effective tax rate of 15% to the profits of the large multinational groups, with the Income Inclusion Rule and the Undertaxed Payments Rule, and the Qualified Domestic Minimum Top-up Tax. The rules apply to the multinational groups with the consolidated revenue above the threshold prescribed by the framework — VERIFY: the €750 million consolidated revenue threshold of the GloBE rules — and India's implementation is the subject of the Finance Act 2025, which introduced the GloBE rules and the domestic top-up tax for the qualifying groups.

The Pillar Two framework is the new layer of the international tax — the assurance that the large multinationals pay at least the 15% minimum wherever they earn, with the top-up collected by the jurisdictions the framework designates. For the Indian groups in the multinational space, the compliance is the computation of the effective tax rate in each jurisdiction under the GloBE rules, the top-up computations, and the filings and the reporting the framework requires.

The cost of an unprepared Pillar Two position is the top-up paid where the planning could have managed it, and the compliance failures — the computations not built, the data not available, the filings missed — each a cost and a risk for the groups the rules cover.

This service is for multinational groups within the Pillar Two scope. We assess the group's coverage under the GloBE rules, compute the effective tax rates and the top-up positions under the framework and the Indian implementation in the Finance Act 2025, plan the group's tax structure and the data systems for the compliance, and manage the filings and the reporting so the group's minimum tax position is computed, planned and filed.

How It Works

  1. 1

    GloBE Scope Assessment

    We assess the group's coverage under the GloBE rules.

    Harun Raaj & Associates does this1-2 weeks
  2. 2

    Effective Rate Computation

    We compute the effective tax rates in each jurisdiction under the framework.

    Harun Raaj & Associates does this2-4 weeks
  3. 3

    Top-Up & QDMTT Positions

    We compute the top-up and the domestic top-up positions.

    Harun Raaj & Associates does this1-2 weeks
  4. 4

    Structure & Data Planning

    We plan the tax structure and the data systems for the compliance.

    Harun Raaj & Associates does this2-4 weeks
  5. 5

    Filings & Reporting

    We manage the filings and the reporting the framework requires.

    Harun Raaj & Associates does thisAnnual

Frequently Asked Questions

What is Pillar Two and the GloBE rules?
The OECD/G20 Inclusive Framework Pillar Two Global Anti-Base Erosion (GloBE) rules set a global minimum corporate tax rate of 15% for large multinational enterprises (MNEs) with consolidated revenue ≥ EUR 750 million in at least 2 of the 4 preceding fiscal years. The rules operate through a top-up tax mechanism — if a jurisdiction's effective tax rate (ETR) on GloBE income is below 15%, the parent jurisdiction or another group jurisdiction charges a top-up tax to bring the rate to 15%.
Which Indian companies are affected by Pillar Two?
Indian MNE groups with consolidated group revenue ≥ EUR 750 million (approximately ₹6,750 crore at current rates) are within scope. India has not yet enacted GloBE domestic legislation (as of June 2026). However, Indian subsidiaries of foreign MNE groups in scope are affected by their parent country's GloBE rules — their ETR in India (after MAT, Section 115BAA, and deductions) is reported to the parent's jurisdiction and may attract top-up tax there if below 15%.
What is the Qualified Domestic Minimum Top-Up Tax (QDMTT)?
A QDMTT is a domestic minimum tax that a country enacts to ensure it collects the top-up tax itself before the parent jurisdiction does. By enacting a QDMTT at 15%, India would retain the top-up tax revenue rather than allowing it to be collected by the EU, UK, or other Pillar Two-implementing jurisdictions. India is expected to enact QDMTT — the government has been consulting on the enabling framework. Once enacted, groups with Indian subsidiaries will need GloBE-adjusted ETR computation for India.
How is the GloBE Effective Tax Rate (ETR) calculated and how does it differ from Indian ETR?
GloBE ETR = Adjusted Covered Taxes ÷ GloBE Income. "Covered taxes" includes current income tax, deferred tax changes, and certain withholding taxes — specifically excluding non-income taxes. "GloBE Income" is financial accounting net income with specific adjustments (exclusion of dividend income, specific R&D and payroll carve-outs). India's Section 115BAA rate of 25.168% generally exceeds the 15% floor — so most Indian operations have no top-up tax exposure, but groups with MAT credits or deferred tax timing differences need careful tracking.
What is the Substance-Based Income Exclusion (SBIE) and why does it matter?
SBIE reduces GloBE taxable income by 5% of the carrying value of tangible assets plus 5% of employee payroll costs in each jurisdiction. This reduces the GloBE income base and thus the top-up tax. The SBIE rewards jurisdictions with real substance — employees and assets — over pure holding structures. India-based operations with real manufacturing and payroll benefit from the SBIE carve-out, making the 15% floor even less likely to bite for genuine Indian operations.

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