How to Navigate the Global Minimum Corporate Tax (Pillar Two) in 2025

Multinationals can no longer treat the global minimum corporate tax as a distant reform. In 2025, OECD Pillar Two rules are being enforced across the EU, Switzerland, the UK, and other major economies. For groups with turnover above €750 million, the obligation is clear: maintain an effective tax rate of at least 15% in every jurisdiction, or face a top-up tax.

For CFOs, tax directors, and investors, the question is no longer what Pillar Two is but how to comply and adapt. This guide outlines the key elements of the rules, the compliance challenges companies are facing, and practical steps to turn regulatory pressure into a strategic advantage.

Understanding Pillar Two in practice

At its core, Pillar Two sets a global floor under corporate taxation. The idea is simple: profits should not escape lightly taxed jurisdictions just because of clever structuring. In practice, however, the rules are anything but simple.

Every multinational group must begin by calculating its effective tax rate in each jurisdiction under the OECD’s Global Anti-Base Erosion (GloBE) rules. If the rate comes in below 15 percent, the company doesn’t get a free pass; an additional “top-up tax” is applied to bring the total up to the minimum. That means incentives like tax holidays or IP box regimes, once prized tools for lowering liabilities, may no longer deliver the same benefit.

The framework also introduces new reporting obligations. Groups must file a Global Anti-Base Erosion Information Return (GIR), a comprehensive disclosure that captures data across global operations. This isn’t a light administrative form—it requires harmonizing accounting data across jurisdictions and reconciling it under a single standard.

To make the rules enforceable, the OECD designed three interlocking mechanisms. These include:

Income Inclusion Rule (IIR): obliges parent companies to pay top-up tax on low-taxed subsidiaries.
Undertaxed Profits Rule (UTPR): acts as a backstop, allowing other jurisdictions where the group operates to collect if the parent does not apply the IIR.
Qualified Domestic Minimum Top-up Tax (QDMTT): introduced by many countries to ensure additional revenue is captured locally rather than abroad.

Implementation status in 2025

In September 2025, the global minimum tax is no longer a theory. Across the EU, Switzerland, and most G7 economies, Pillar Two rules are in force and shaping corporate tax planning.

European Union. The directive took effect in January 2024, and most member states are now applying both the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR). Groups operating across multiple EU countries should expect little tolerance for delay.
Switzerland. A Qualified Domestic Minimum Top-up Tax (QDMTT) has been applied since January 2024, ensuring that Switzerland collects additional revenue locally rather than leaving it to foreign tax authorities.
United Kingdom, Canada, Japan, South Korea. Each has phased in its own version of the rules during 2024–2025, with reporting obligations already building.
United States. Washington continues to rely on the GILTI regime, which only partially aligns with OECD standards. Full convergence remains debated, but U.S.-based groups with overseas subsidiaries are already affected by foreign jurisdictions’ rules.

Action step: For any multinational operating in the EU, Switzerland, or other G7 markets, the working assumption in 2025 must be that Pillar Two applies. Compliance should be treated as an immediate priority, not a future project.

Compliance challenges and how to overcome them

Many MNEs underestimated the operational demands of Pillar Two. The main challenges are:

Challenge	What it means in practice	How to respond
Complex ETR calculations	Requires adjustments to accounting data (IFRS/GAAP differences).	Build centralized calculation models and test them against OECD guidance.
Data collection across subsidiaries	Dozens of entities, some in countries with weak reporting systems, are involved.	Standardize reporting templates and centralize data flows.
GloBE Information Return (GIR)	First filings due in 2026 for 2024 periods.	Start parallel “dry runs” now to test reporting readiness.
Interaction with existing rules	Overlaps with CFC, transfer pricing, and domestic anti-avoidance.	Map all tax rules side-by-side to avoid double adjustments.
Technology gaps	ERP systems often not configured for GloBE.	Invest in automation and compliance modules rather than manual workarounds.

How to turn Pillar Two into a strategic advantage

Pillar Two is often framed as a compliance burden, but for companies that adapt quickly, it can become a catalyst for stronger governance and more innovative structures. The reforms create several openings:

Enhance investor confidence. Early compliance demonstrates transparency and discipline. For investors focused on ESG performance, being ahead of the curve on Pillar Two signals strong governance and reduces reputational risk.
Rationalize group structures. Many entities created for tax arbitrage now add more cost than value. Consolidating or exiting them reduces risk, lowers administrative overhead, and simplifies global reporting.
Capitalize on domestic top-up taxes (QDMTTs). Paying top-up tax locally helps retain value in host countries, building stronger relationships with governments, and reducing exposure to disputes in other jurisdictions.
Shift toward sustainable incentives. With tax holidays losing their edge, businesses should pivot to non-tax benefits like R&D credits, innovation grants, and workforce programs; advantages that drive growth and resilience beyond tax savings.

Action step: Treat Pillar Two as an inflection point. Use compliance as the trigger to rationalize structures, build investor trust, and reposition for long-term growth.

Practical steps for businesses in 2025

Pillar Two is no longer about watching policy debates; it’s about execution. Multinationals that want to stay ahead should treat 2025 as the year to pressure-test systems, clean up structures, and signal readiness to markets. Key actions include:

Map global ETR exposure. Run jurisdiction-by-jurisdiction simulations to see where effective tax rates fall below 15%. This gives an early warning of where top-up taxes will bite and which entities are most at risk.
Modernize reporting systems. ERP and consolidation platforms must be capable of producing GloBE-compliant data. Companies that still rely on manual workarounds risk errors, delays, and audit findings.
Rehearse the first GIR filing. The Global Anti-Base Erosion Information Return will be due in 2026, but 2025 should be used as a trial run to collect, validate, and reconcile data.
Rationalize entity structures. Review subsidiaries in low-tax jurisdictions that no longer deliver an advantage under Pillar Two. Exiting or consolidating them reduces compliance overhead and reputational exposure.
Engage with local tax regimes. Where Qualified Domestic Minimum Top-up Taxes (QDMTTs) exist, ensure obligations are met locally to avoid double taxation in other jurisdictions.
Communicate with investors. Proactive disclosure on Pillar Two compliance builds trust with stakeholders and reduces the risk of negative surprises in financial reporting.

Bottom line: 2025 is the transition year. Companies that use it to stress-test compliance and make structural adjustments will enter 2026 prepared, credible, and less exposed to costly surprises.

How SIGTAX Can Support Multinationals

Navigating Pillar Two requires more than technical calculations; it demands strategic choices about where and how groups operate. SIGTAX supports multinational clients through:

Tax advisory and planning to interpret Pillar Two rules and design effective compliance strategies.
Compliance workflow support to standardize data collection and prepare for GloBE reporting.
Cross-border structuring to minimize unnecessary exposure and align entities with substance requirements.
Country-specific guidance across Switzerland, EU member states, and other key markets.
Ongoing monitoring of OECD updates and local implementations to anticipate regulatory shifts.

Conclusion

The global minimum corporate tax is no longer an abstract debate—it is an operational reality in 2025. Multinationals that treat Pillar Two purely as a compliance burden risk falling behind, while those that act strategically can simplify structures, strengthen investor trust, and realign incentives for long-term growth.

By the end of 2025, companies should have:

Mapped global ETR exposure.
Aligned ERP systems with GloBE rules.
Tested data collection for the first GIR filing.
Reassessed entity structures.
Engaged with local tax authorities on QDMTTs.

The businesses that get ahead now will enter 2026 with fewer surprises, smoother audits, and a stronger position in global markets.

Contact SIGTAX to review your group structure and prepare your compliance strategy for Pillar Two.