Definition
Pillar Two Global Minimum Tax
Pillar Two is the OECD-led framework to ensure large multinational groups pay a minimum effective tax rate in every country where they operate.
Under the global tax deal, Pillar Two establishes a minimum effective tax rate for very large multinational enterprises, with top-up taxes if profits in a jurisdiction are taxed below that floor. It aims to curb profit shifting to low-tax havens and limit harmful tax competition.
For India, the framework interacts with domestic incentives, the equalisation levy and treaty positions, and may affect how attractive tax breaks are if a top-up is collected elsewhere. Pillar One, the companion measure, addresses reallocating taxing rights over the largest, most profitable firms.
Related terms
- Equalisation Levy (Google Tax)The equalisation levy is a tax on certain payments to non-resident digital companies, aimed at taxing income that escapes India's traditional tax net.
- DTAA (Double Taxation Avoidance)A Double Taxation Avoidance Agreement is a treaty between two countries that prevents the same income from being taxed twice and allocates taxing rights between them.
- Transfer PricingTransfer pricing rules govern how transactions between related entities, often across borders, must be priced to reflect fair market value for tax purposes.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.