Pillar Two — Global Minimum Tax (GloBE)

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%.

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%.

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.

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.

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.