Compliance
Navigating Australia’s Pillar Two Rules: What Multinational Entities Must Do Now
With Australia’s Pillar Two (GloBE, IIR, UTPR, DMT) framework coming into force for fiscal years as early as 1 January 2024 and first returns due by 30 June 2026, it's essential multinational enterprise groups understand their obligations today.
By NomadicTax Research Team • 5-8 min read • March 8, 2026
## What Are Pillar Two Rules in Australia?
Australia has adopted the **OECD’s Global Anti-Base Erosion (GloBE) Model Rules**, which introduce **four new obligations** for large multinational enterprise (MNE) groups with Australian entities. These are:
- The **Global Information Return (GIR)**: information only, helping assess compliance with GloBE rules. ([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/in-detail/multinationals/global-and-domestic-minimum-tax/lodging-paying-and-other-obligations-for-pillar-two?utm_source=openai))
- The **Income Inclusion Rule / Undertaxed Profits Rule return (AIUTR)**: for groups where there is a top-up tax under these rules. ([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
- The **Domestic Minimum Tax Return (DMTR)**: applies when a domestic minimum tax applies. ([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
- **Foreign Lodgment Notification**: when GIR is lodged overseas under certain agreements, notification to the ATO is still required. ([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/in-detail/multinationals/global-and-domestic-minimum-tax/lodging-paying-and-other-obligations-for-pillar-two?utm_source=openai))
## Key Dates and Transition Periods
- These rules apply retrospectively from **1 January 2024** for GIR and IIR/UTPR obligations. DMTR applies from **1 January 2025**. ([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
- For groups with 31 December year-end, the **first returns are due by 30 June 2026**. ([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
- The ATO is committed to a **soft-landing / transitional compliance approach**, meaning penalties during early years may be relaxed provided reasonable steps are taken. ([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
## Practical Steps for Compliance
1. **Determine In-Scope Status**
- Identify if your group is an “Applicable MNE Group” under the definition in Australian law. Even if no top-up tax is due, obligations may still apply. ([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/in-detail/multinationals/global-and-domestic-minimum-tax/lodging-paying-and-other-obligations-for-pillar-two?utm_source=openai))
- Assess whether your group has nominated a **Designated Local Entity (DLE)** to file on behalf of all Australian entities. ([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/in-detail/multinationals/global-and-domestic-minimum-tax/lodging-paying-and-other-obligations-for-pillar-two?utm_source=openai))
2. **Prepare Reporting and Data Infrastructure**
- The GIR, AIUTR, DMTR and notification forms are under development; ensure systems are operational ahead of due dates. ([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
- Collect data on earnings, revenues, profits, location-by-location financial data, and ensure records that support group structure. This includes handling entities with nil tax obligations. ([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/in-detail/multinationals/global-and-domestic-minimum-tax/lodging-paying-and-other-obligations-for-pillar-two?utm_source=openai))
3. **Keep Up With Guidance and Rulings**
- Review the **draft Practical Compliance Guideline PCG 2025/D3**, which sets out transitional approach. Although consultation closed mid-2025, ATO aims to finalize by late 2025. ([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
- Monitor ATO rulings like **TR 2006/11DC** updates that incorporate Pillar Two provisions. ([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
4. **Decide on Safe Harbour Options**
- The transitional Country-by-Country Reporting (CbCR) safe harbour may help reduce compliance burden where certain MNEs meet conditions. Evaluate whether your group is eligible. ([globaltaxnews.ey.com](https://globaltaxnews.ey.com/news/2025-2423-australia-publishes-pillar-two-compliance-and-administrative-guidance-first-returns-due-by-30-june-2026?utm_source=openai))
## Examples
- A US-based multinational with an Australian branch and global revenue exceeding threshold: must lodge the GIR (even if lodged overseas via a Designated Filing Entity), plus AIUTR or DMTR if applicable.
- An Australian headquartered MNE with several subsidiaries: likely no exemption, must ensure internal systems collect consistent data across entities for effective and compliant returns.
## Why It Matters
- **Penalties** can be imposed under Australian law for failure to lodge or incorrect lodging of Pillar Two returns. Even when tax payable is nil, lodging obligations still apply. ([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/in-detail/multinationals/global-and-domestic-minimum-tax/lodging-paying-and-other-obligations-for-pillar-two?utm_source=openai))
- **Reputational risk**: Cross-border transparency is increasing, and being seen as non-compliant may damage corporate reputation.
- **Financial risk**: Errors or late filings may result in additional taxes, interest, or costs associated with correction.
## Action Plan Before 30 June 2026
| Task | Responsible Parties | Timeline |
|------|----------------------|----------|
| Assess whether your group is in-scope | Tax / Legal Team | By mid-2026 |
| Assess possibility of nominating a Designated Local Entity | Board / Tax Leadership | Q1 2026 |
| Build or upgrade systems to collect necessary data | Finance / Systems / Compliance | Q1-Q2 2026 |
| Review guidance, rulings, safe harbour availability | Tax Advisory / Counsel | Continuous to late 2025 |
| Submit returns by 30 June 2026 for 31 Dec year-ends | Tax Professionals | Before filing deadline |
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**Bottom line:** Pillar Two is here. Even if you expect nil tax, the compliance obligations can be just as important. Be proactive, build capability now, and avoid last-minute scramble.