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CA Final · Direct Tax Laws & International Taxation · Latest Developments in International Taxation

Case: Rangoli Textiles Ltd, an Indian company, is a constituent entity of a multinational group headquartered in Singapore. The group's consolidated revenue is well above the threshold for the OECD Pillar Two GloBE rules. In Pillar Two terminology, which rate is the agreed global minimum effective tax rate that triggers a top-up tax when a jurisdiction's effective rate falls below it?

The Pillar Two GloBE rules set the global minimum effective tax rate at 15%. Where the effective tax rate of a multinational group's entities in a jurisdiction is below 15%, a top-up tax applies to bring the effective rate up to that minimum.

  1. A10%
  2. B15%Correct
  3. C20%
  4. D25%

Explanation

The GloBE rules under Pillar Two set a global minimum effective tax rate of 15%. If the jurisdictional effective tax rate of a group's entities falls below 15%, a top-up tax is charged for the shortfall. The other rates are not the agreed minimum.

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