Australia has implemented a 15% global and domestic minimum tax on multinational enterprise groups under the Organisation for Economic Co-operation and Development (OECD)/G20 Two-Pillar Solution framework.
The reform implements the Global Anti-Base Erosion (GloBE) Model Rules as part of the OECD/G20 Two-Pillar Solution addressing tax challenges arising from the digitalisation of the economy.
Primary legislation received royal assent on 10 December 2024, establishing the framework for the global and domestic minimum tax and making consequential amendments to integrate top-up tax administration into Australia’s existing tax system. Subordinate legislation setting out detailed computational rules took effect on 23 December 2024.
The regime comprises two interlocking global minimum tax rules and a domestic minimum tax. The Income Inclusion Rule (IIR) allows Australia to impose top-up tax on multinational parent entities located in Australia where a group’s effective tax rate in another jurisdiction falls below 15%. The Undertaxed Profits Rule (UTPR) operates as a backstop, applying top-up tax to Australian constituent entities where low-taxed profits are not captured under an IIR.
The domestic minimum tax gives Australia primary rights to impose top-up tax on low-taxed profits arising domestically, taking priority over the IIR and UTPR.
The IIR and domestic minimum tax apply to fiscal years beginning on or after 1 January 2024. The UTPR applies to fiscal years beginning on or after 1 January 2025.
On 28 January 2026, Australia signed the Multilateral Competent Authority Agreement on the Exchange of GloBE Information (GIR MCAA), becoming a listed signatory. Bilateral exchange relationships will take effect once notification procedures conclude.
The Australian Taxation Office (ATO) has issued Practical Compliance Guideline PCG 2025/4 outlining transitional lodgment obligations and continues consultation on further guidance.
To maintain qualification status under the OECD framework, Australia must apply its law consistently with OECD GloBE materials, including future administrative guidance. The legislation includes a rule-making power to incorporate OECD updates efficiently, including on a retrospective basis where necessary. Any amendments remain a policy decision for government.
Taxpayers may self-assess under existing law. Where retrospective amendments increase liabilities, affected entities must amend returns and pay additional tax if changes are enacted. The ATO will apply its standard administrative approach to retrospective legislation, including interest and penalties.
Separately, the OECD Inclusive Framework agreed to a side-by-side package on 5 January 2026, introducing simplifications, a one-year extension of the transitional country-by-country reporting safe harbour, and a side-by-side safe harbour regime. Adoption into Australian law remains a matter for government.
Under the side-by-side safe harbour, which applies to fiscal years commencing on or after 1 January 2026, eligible multinational groups with an ultimate parent entity in a jurisdiction with a qualified side-by-side regime may have IIR and UTPR top-up tax deemed to be zero. The United States is currently the only jurisdiction recognised as having such a regime. The measure would not affect Australia’s domestic minimum tax or related lodgment requirements.
Last updated: 17th Feb 2026
About the Author
Ro Elvinia is ABN Australia's Customer Success and Marketing Manager. She holds a bachelor’s degree in mass communication, majoring in journalism, and also has an academic background in civil engineering. With over a decade of experience in professional writing and a background spanning journalism, Australian immigration, and business services, Ro brings a unique mix of communication and analytical expertise. She works closely with international clients and contributes to ABN Australia's content strategy, helping global businesses stay informed and confident as they navigate the Australian market.
Ro Elvinia
Customer Success and Marketing Manager