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OECD Pillar Two – Minimum Tax GloBE Rules

  • Ireland
  • Tax planning and consultancy



On 20 December 2021, the OECD published the Pillar Two Minimum Tax Model Rules, as approved by the OECD/G20 Inclusive Framework on BEPS. Below we summarise the scope and the mechanics of the rules.


Through workstreams ongoing since 2017, the Inclusive Framework has developed a two-pillar approach to address tax challenges arising from the digitalisation of the economy. Pillar One addresses the challenges associated with nexus and profit allocation and Pillar Two introduces global minimum tax rules. The publication of the Pillar Two model rules, or Global Anti-Base Erosion (“GloBE”) rules, follows an agreement by 137 of the 141 members of the OECD/G20 Inclusive Framework to set the minimum tax rate at 15% in October 2021. Ireland was one of the signatories of the agreement (see our previous article here) and will adopt the GloBE rules once they become operational.

Scope of the GloBE Rules

The GloBE rules will apply a global minimum effective tax rate to multinationals (“MNE(s)”) with global revenues in excess of €750million in at least two of the previous four fiscal years. MNEs targeted by the GloBE rules do not include any government entities, international organisations, non-profits, or a pension or investment fund that is the ultimate parent of an MNE group.

Key Operative Rules

All countries choosing to implement the GloBE rules will have to do so in a co-ordinated way. Ireland, like the other 136 Framework members which have signed up to the agreement, will legislate for the rules and impose a 15% minimum tax rate on MNEs within the scope of the GloBE rules. The GloBE Rules are made up of the primary Income Inclusion Rule (“IIR”) and the secondary Undertaxed Payments Rule (“UTPR”).

Once the effective tax rate of an MNE has been determined in line with the GloBE rules, and it is established that a jurisdictional top-up tax applies for low-taxed jurisdictions such as Ireland, the top-up tax is imposed under the IIR, which is payable by the ultimate parent of the MNE. The UTPR applies to low-taxed MNEs where the ultimate parent is located in a jurisdiction that has not imposed the IIR. Where the country does not apply the primary IIR, another parent entity in the group further down in the ownership chain must apply the IIR under the agreed rule order. Where the MNE is still not subject to tax at the 15% minimum tax rate, the UTPR applies, ensuring the payment of the minimum tax through a denial of deduction in the countries where the MNE has a presence.

The IIR and UTPR ensure that top-up tax will be collected in jurisdictions that have introduced the GloBE rules, even where the MNE operates in or through other jurisdictions that have not implemented the rule.

Implementation of the GloBE Rules

The OECD has stated that the implementing provisions for the GloBE rules should be operational by 1 January 2023. While this date is subject to the wider global progress of the initiative, the publication of the rules is an important step in the implementation of Pillar Two. Commentary to the GloBE rules is expected to be published by the OECD in early 2022, together with commentary on the interaction with the US Global Intangible Low-Taxed Income (“GILTI”) rules. A GloBE Implementation Framework relating to the administration, compliance and coordination of the rules is expected to be completed by the end of 2022. A public consultation on the Implementation Framework will be held by the OECD in March 2022.

The EU has also recently published a proposal to implement Pillar Two through an EU Directive which reiterates the EU’s pledge to be amongst the first to implement the international agreement reached in October 2021.

Key Takeaways

• There is no change to the standard Irish corporate tax rate of 12.5% for businesses in Ireland with revenues below €750 million. This includes domestic and international businesses, start-up and developed businesses who have established or will establish active trading operations in Ireland.

• Ireland’s corporate tax rate of 12.5% will be increased to 15% for MNEs within the scope of the GloBE rules, with revenues above €750 million.

• Other features of the Irish tax regime, including R&D tax credits, tax depreciation for IP, broad exemptions from withholding taxes, as well as the investment funds tax regime, remain unchanged as a result of these rules, for companies in scope of the GLoBE rules.

• In addition to significantly changing international tax rules, the implementation of the GloBE rules will introduce new filing obligations for in scope Irish MNEs. More information will be available in this regard once the Implementation Framework is published later this year.

• The aim of the GloBE rules is to create a common and consistent effective tax rate globally and create a transparent and level playing field. By implementing the OECD’s Pillar Two GloBE rules, Ireland will remain competitive from a tax perspective, and will continue to offer stability to both Irish and international investors and remaining the jurisdiction of choice for multinational expansion.

For more information on how the OECD’s Pillar Two GloBE rules may affect your business, please contact a member of the Tax Team:

Alan Connell, Managing Partner and Head of Tax:

Tim Kiely, Partner - Tax Group:

Robert Dever, Senior Associate - Tax Group:

Melissa Daly, Senior Associate – Tax Group:

Niall Pilkington, Solicitor – Tax Group:

Aoife Noone, Solicitor – Tax Group: