Entity Setup
Global and Domestic Minimum Tax: What Multinational Entities Must Know
New rules under Australia’s implementation of the OECD Pillar Two impose a global minimum tax on multinationals. Here’s how the Income Inclusion Rule, Undertaxed Profits Rule, and Domestic Minimum Tax affect Australian-headquartered groups.
By NomadicTax Research Team • 5-8 min read • July 16, 2026
## What Pillar Two Introduces
Australia has implemented the OECD’s Global Anti-Base Erosion (GloBE) Model Rules via the **Global and Domestic Minimum Tax** framework. These laws are in force, having received Royal Assent in **December 2024**, with subordinate legislation following. ([apiportal.ato.gov.au](https://apiportal.ato.gov.au/api-products/global-and-domestic-minimum-tax?utm_source=openai))
Key components include:
- **Income Inclusion Rule (IIR)** applies to fiscal years **starting on or after 1 January 2024**. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-19a11d5f-5a98-4cff-ba03-5aea1b50aaf2?utm_source=openai))
- **Undertaxed Profits Rule (UTPR)** applies **from 1 January 2025**. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-19a11d5f-5a98-4cff-ba03-5aea1b50aaf2?utm_source=openai))
- **Domestic Minimum Tax (DMT)** applies to fiscal years starting on or after **1 January 2024**, ensuring large multinationals pay at least 15% tax in Australia even if they don’t owe under IIR or UTPR. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-19a11d5f-5a98-4cff-ba03-5aea1b50aaf2?utm_source=openai))
## Who Is In Scope?
- Multinational Enterprise (MNE) Groups with **global revenue** of at least **EUR 750 million**. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-19a11d5f-5a98-4cff-ba03-5aea1b50aaf2?utm_source=openai))
- Group entities that cross jurisdictional boundaries and have profits in Australia.
- Australian-headquartered multinationals with vast international operations. Even if based overseas, operational presence in Australia under certain conditions triggers liability.
## Compliance, Reporting & Administration
- In-scope entities must lodge a **Combined Global and Domestic Minimum Tax Return (CGDMTR)** via the ATO APIs. The ATO has published an active API product to facilitate these lodgments. ([apiportal.ato.gov.au](https://apiportal.ato.gov.au/api-products/global-and-domestic-minimum-tax?utm_source=openai))
- Key deadlines: IIR reporting for income years from 1 Jan 2024; UTPR from 1 Jan 2025. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-19a11d5f-5a98-4cff-ba03-5aea1b50aaf2?utm_source=openai))
- Record keeping is critical, especially for tracking profit allocations, tax paid in foreign jurisdictions, and amounts under various rules.
## Practical Example
Suppose *GlobalCo Group* records global revenue well over the EUR 750 million threshold. Its Australian operations earn profits subject to foreign jurisdictions, some of which have low tax rates. Under IIR, if those foreign profits were undertaxed, GlobalCo may need to pay a “top-up” tax into Australia to meet 15% benchmark. If some profits escaped IIR but are addressed via UTPR, Australia may impose the tax to ensure compliance.
## Strategic Considerations
- **Evaluate international tax strategies**: with Pillar Two live, aggressive tax planning that relies on low-tax jurisdictions must be re-assessed.
- **Coordinate audits and reporting across jurisdictions** to avoid inconsistent interpretations and double counting of liabilities.
- **Ensure systems and software can capture required data**—especially via the ATO’s API offerings. Early adoption aids smoother compliance. ([apiportal.ato.gov.au](https://apiportal.ato.gov.au/api-products/global-and-domestic-minimum-tax?utm_source=openai))
**Summary**: Pillar Two’s framework changes the global tax game. Multinational entities must understand IIR, UTPR, and DMT obligations, and prepare rigorous record keeping immediately.