What is BEPS Pillar 2?
BEPS Pillar 2 (also called the Global Anti-Base Erosion Rules, or GloBE) is the OECD/G20 framework establishing a 15% global minimum effective tax rate on large multinational enterprises (MNEs): groups with consolidated revenue of €750M+. Pillar 2 fundamentally restructures international corporate taxation by eliminating much of the historical incentive for profit-shifting to low-tax jurisdictions, regardless of source-country tax rules or treaty positions. Pillar 2 entered force in EU and many other jurisdictions in 2024, with global implementation continuing through 2026.
Pillar 2 operates through three interlocking rules: (i) Qualified Domestic Minimum Top-up Tax (QDMTT): implemented by source jurisdictions to “top up” effective tax to 15% on local profits (keeps the additional revenue in the source country rather than letting it flow to home-country IIR); (ii) Income Inclusion Rule (IIR): implemented by parent jurisdictions to tax low-taxed income of foreign subsidiaries up to the 15% minimum (parent-jurisdiction top-up); and (iii) Undertaxed Profits Rule (UTPR): backstop allocating top-up tax among jurisdictions where the MNE operates if QDMTT and IIR don’t apply (typically by denying deductions or imposing a separate tax).
The 15% effective tax rate (ETR) is calculated under specific Pillar 2 rules: distinct from book-income, cash-tax, or any single jurisdiction’s tax base. The calculation: Adjusted Covered Taxes (covered taxes on GloBE income) divided by GloBE Income (accounting income with specific adjustments). When ETR falls below 15%, the difference is “topped up” through QDMTT, IIR, or UTPR. The framework includes Substance-Based Income Exclusion (SBIE): carving out a percentage of payroll and tangible assets from the GloBE base (5% by 2033, declining transition), reducing top-up on substance-rich operations.
Major implications for international tax planning include: (i) low-tax holding jurisdictions (Cayman, BVI, Bermuda, IoM): historically attractive for parking IP and capital: now generally face top-up to 15%, although the side-by-side package announced by the OECD/G20 Inclusive Framework in January 2026 provides a safe harbour from the IIR and UTPR for groups whose ultimate parent is in a qualifying jurisdiction such as the United States; (ii) tax-incentive and low-rate jurisdictions: where incentives or a low headline rate bring a group’s jurisdictional effective tax rate below 15%, the advantage is largely neutralised by top-up tax; and (iii) substance-rich jurisdictions retain residual advantage through SBIE carve-out.
For Turkish corporate groups exceeding the €750M revenue threshold or being part of larger MNE structures, Pillar 2 compliance is a major operational requirement: detailed jurisdiction-by-jurisdiction ETR calculations, QDMTT/IIR/UTPR allocation analysis, GloBE Information Return filing (within 15 months of fiscal year-end, 18 months for first reporting period), and integration with CbCR (Country-by-Country Reporting) data. Even smaller Turkish groups not directly subject to Pillar 2 face indirect impacts through MNE-investor pressure for substance, the diminishing arbitrage value of low-tax holding structures, and the strategic reset of jurisdictional planning.
Sources. Council Directive (EU) 2022/2523 on a global minimum level of taxation, Law No. 7524 (introducing the domestic and global minimum top-up corporate tax in Türkiye) and Corporate Tax Law No. 5520.