Australia: Announced Australian implementation of Pillar Two Global Minimum Tax Rules

On 9 May 2023, as part of the 2023-24 Budget, the Government announced it would implement key aspects of Pillar Two of the OECD/G20 Two-Pillar Solution to address the tax challenges arising from the digitalisation of the economy. The Government has proposed changes to introduce a global minimum tax and a domestic minimum tax. The two-pillar solution aims to ensure effective taxation of the digital economy. Pillar One includes tax rates for multinational enterprises (MNEs) with a global turnover of more than EUR 20 billion and before-tax profitability of 10%. This pillar seeks to reallocate profit taxation rights from the MNEs' physical location to the destination countries of their goods or services. Pillar Two focuses on ensuring that all MNEs with a global revenue threshold of over EUR 750 million are taxed at a minimum rate of 15% in every jurisdiction they operate.