Compliance

The Rise of the Global Minimum Tax: How It Impacts Large Multinationals in Australia

Australia has officially implemented Pillar Two of the OECD/G20 Two-Pillar Solution, introducing a **15% global minimum tax** and domestic minimum tax effective from January 2024. Here’s what large multinationals need to know about compliance, calculation, and planning pitfalls.

By NomadicTax Research Team • 6 min read • November 23, 2025

## What Has Changed? Australia now enforces key elements of the **OECD Pillar Two global minimum tax rules**—both the Income Inclusion Rule and the Undertaxed Profits Rule are in effect. Broadly speaking, large multinational enterprise (MNE) groups with global revenue of **EUR 750 million or more** must ensure that they pay at least **15% tax** in each jurisdiction where they do business.([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/international/implementation-of-a-global-minimum-tax-and-a-domestic-minimum-tax?utm_source=openai)) This also includes a **domestic minimum tax** for income earned at home that is taxed below that 15% rate.([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/international/implementation-of-a-global-minimum-tax-and-a-domestic-minimum-tax?utm_source=openai)) The law—encompassing the *Taxation (Multinational—Global and Domestic Minimum Tax) Act 2024*—has already received Royal Assent and been registered; rules are live and applicable starting from fiscal years on or after **1 January 2024** (Income Inclusion Rule) and **1 January 2025** (Undertaxed Profits Rule).([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/international/implementation-of-a-global-minimum-tax-and-a-domestic-minimum-tax?utm_source=openai)) ## Who Must Comply If your business is a large MNE with global turnover equal to or above EUR 750 million, or a domestic multinational with similar exposure, you are likely in scope. Entities with foreign operations, subsidiaries, or foreign-controlled entities should carefully assess whether the new rules apply.([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/private-wealth-international-program/new-international-tax-measures-affecting-private-groups?utm_source=openai)) ## Key Planning and Compliance Steps - **Assess your jurisdictional effective tax rates** to identify where “top-up tax” might be payable. If a foreign jurisdiction taxes earnings at less than 15%, Australia may impose supplementary tax. - Prepare to lodge the **Global Anti-Base Erosion (GloBE) Information Return** (GIR). The ATO is developing its systems and API tools to allow for lodging of GIRs and domestic reporting forms.([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/Pillar2_20250305?utm_source=openai)) - Ensure transfer pricing documentation, structured group agreements, and global financing strategies align with the GloBE model rules. - Look at **debt-heavy financing structures**: the thin capitalisation and debt deduction creation rules already tightened limitations on interest deductions.([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/private-wealth-international-program/new-international-tax-measures-affecting-private-groups?utm_source=openai)) ## Examples - A Germany-based parent company with subsidiaries in several FX jurisdictions where local tax rates are below 15% may now owe extra tax in Australia, if the effective rate in those jurisdictions is too low under the GIR or UTPR. - An Australian multinational with internal debt arrangements should review whether related-party interest payments may be disallowed or taxable under the DDCR (Debt Deduction Creation Rules). Those disallowed deductions can’t be carried forward under some tests.([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/private-wealth-international-program/new-international-tax-measures-affecting-private-groups?utm_source=openai)) ## Actionable Advice - Map your **global income, deductions, and tax base** across jurisdictions to understand exposure. - Review **intercompany agreements and financing structures** now rather than waiting for audits. - Engage with tax advisors to develop systems capable of delivering compliance with GIR and domestic income reporting—custom software, API submissions or use of DSPs. - Stay up to date with ATO guidance—look out for **Practice Statements** or public guidance documents that clarify grey areas. Understanding Pillar Two is no longer optional—it’s law. Large MNEs must shift from planning future compliance to implementing it now.