The OECD has published further details for the Global Anti-Base Erosion (GloBE) rules that form part of Pillar Two of its ongoing work against Base Erosion and Profit Shifting (BEPS). These are the rules that aim to ensure a minimum global tax rate of 15% for all large Multi-National Enterprise groups (MNEs).

The new BEPS rules will apply to all MNEs with a consolidated turnover of more than €750 million and are expected to generate about $150 billion in additional worldwide taxes.

Agreement was reached at the recent G20 summit and by 136 of 140 Organisation for Economic Cooperation and Development (OECD) members and the plan is to have the rules incorporated into domestic legislation during 2022, in order to be effective from 2023. This newly published detail aids the transition into domestic law. It sets out:

  • The definition of which MNEs are to be caught by the new rules.
  • The mechanism for calculating the MNE's effective tax rate and the amount of top-up tax that would be payable.
  • The top-up tax will be applied to a member of the group in an agreed order starting with the ultimate parent company.

Commentary on the rules will be released in early 2022, followed by details of an implementation framework which will then be subject to a public consultation.

The rules of Pillar Two aim to ensure a minimum tax rate of 15% is applied to profits arising in any jurisdiction as a counter-measure to treaty shopping, whereby large MNEs seek to be taxed in low tax jurisdictions.


The introduction of a minimum tax rate of 15% may seem like a relatively low bar, especially for companies in the UK awaiting the Rise in corporation tax rates to 25% from 2023. However, it is an indication of just how low some MNEs can get their global effective rates of tax, through various methods of base shifting and profit extraction, that the anticipated tax yield of these plans is circa $150 billion.

Useful guides on this topic

BEPS & Diverted Profits Tax (for SME owners)
What is BEPS? What is Diverted Profits Tax? Will either of these affect me or my SME clients? 

Diverted Profits Tax
Large multinational enterprises (MNEs) that use arrangements between connected parties to divert profits away from the UK and avoid UK tax, will be subject to the Diverted Profits Tax (DPT). Who does it apply to? What are the rules?

Budget 2021: Corporation Tax rate change
In the 2021 Budget and confirmed in Finance Act 2021, the Chancellor announced that the rate of Corporation Tax would change with effect from 1 April 2023. 

External link

OECD releases Pillar Two model rules for domestic implementation of 15% global minimum tax


Squirrel ad

Are you enjoying our content? 

Thousands of accountants and advisers and their clients use as their primary TAX resource.

Register with us now to receive our receive our FREE SME Topical Tax Update & newletter