This note describes pillar two of the OECD Inclusive Framework's two-pillar proposal to address the tax challenges arising from the digitalisation of the economy.

The pillar two proposal is for a global minimum tax rate for large multinationals, which is effected through an income inclusion rule requiring parent entities to pay top-up tax in respect of low-taxed income of constituent entities and is supported by source taxation of income not taxed at minimum rates through an undertaxed payments rule and a treaty-based subject to tax rule.