GloBE: The Global Anti-Base Erosion Rules

Definition

GloBE — the Global Anti-Base Erosion rules — is the Pillar Two set of model rules that imposes the 15% global minimum tax on the large multinational groups: where a group’s jurisdictional ETR falls below 15%, a top-up tax is charged on the difference, allocated by the IIR, UTPR and QDMTT mechanisms. GloBE is the computation framework — the GloBE rules guide has the mechanics in full — and the glossary’s content is the framework’s shape: the consolidated CbC group, the jurisdictional profit (the adjusted covered income), the covered taxes, the ETR, the 15% floor, and the top-up tax on the difference.

GloBE, in one computation:
  1. The consolidated CbC group (the in-scope entities, the €750m revenue
     test — the scope)
  2. The jurisdictional profit (the ACI — the adjusted covered income, per
     jurisdiction, from the consolidation with the GloBE adjustments)
  3. The covered taxes (the income taxes paid / payable to the
     jurisdiction — the numerator)
  4. The jurisdictional ETR = covered taxes ÷ ACI (the ratio)
  5. The 15% floor: ETR < 15% → the top-up tax on (15% − ETR) × (ACI − SBIE)
     (the base, the [SBIE](/docs/pillar-two/etr-sbie) excluded)
  6. The allocation: the IIR (the parent), the UTPR (the top-up where the
     IIR does not reach), the QDMTT (the domestic minimum, where enacted)

The element	The content
The scope	The consolidated CbC group (the MNE group with the consolidated revenue ≥ €750m in at least 2 of the preceding 4 years — the in-scope entities, the jurisdictional split)
The jurisdictional profit	The ACI (the adjusted covered income) — the jurisdictional profit from the consolidation, with the GloBE adjustments (the intercompany consistency, the loss treatment, the specified items) — the ETR and SBIE guide has the denominator
The covered taxes	The income taxes paid / payable to the jurisdiction (the current, the deferred per the model rules, the credits per the model rules) — the ETR and SBIE guide has the numerator
The ETR + the floor	The jurisdictional ETR (covered taxes ÷ ACI) against the 15% floor — the top-up tax where below
The mechanisms	The IIR (the income inclusion rule — the parent charges the top-up), the UTPR (the undertaxed profits rule — the top-up where the IIR does not reach), the QDMTT (the qualified domestic minimum top-up tax — the domestic minimum, where the jurisdiction enacts it) — the IIR, UTPR & QDMTT guide

The working read (the Pillar Two guide and the Pillar Two for TP teams): GloBE is the computation the transfer pricing feeds — the jurisdictional split (the ACI) is the intercompany pricing’s outcome, and the ETR is the ratio the top-up runs on. The transfer pricing interaction is the chain: the price (the TP decision) → the split (the jurisdictional profit) → the ETR → the top-up. GloBE does not change the arm’s length price — it hangs the second computation (the minimum tax) on the pricing’s outcome.

Example

The MNE group (the consolidated revenue €2bn, in scope): the Indian jurisdictional profit (the ACI) is €50m, the covered taxes (the income tax paid to India) are €7.5m — the jurisdictional ETR is 7.5/50 = 15% (the floor met, no top-up for India). The Cayman jurisdictional profit (the ACI) is €30m, the covered taxes are €0.9m — the ETR is 0.9/30 = 3% (below the floor). The top-up tax on the Cayman: (15% − 3%) × (€30m − SBIE) — the base (the ACI minus the SBIE substance income), the rate (12%), the top-up charged. The allocation: the IIR (the parent, in the in-scope parent jurisdiction, charges the top-up on the Cayman’s undertaxed profit) — the IIR, UTPR & QDMTT mechanics, the transitional safe harbour checked for the applicable years.

See also

• GloBE Rules: How the Calculation Works (the guide)
• Pillar Two Explained
• ETR and SBIE · IIR, UTPR & QDMTT

FAQ

What is the GloBE scope — which groups are in? The consolidated CbC group with the consolidated revenue ≥ €750 million in at least 2 of the 4 preceding fiscal years — the large MNE groups. The in-scope entities (the group’s entities, the jurisdictional split) are the computation’s inputs. The group below the threshold (the revenue under €750m) is out of GloBE’s scope (the minimum tax does not apply) — the Pillar Two guide has the scope determination.

How does GloBE interact with the existing TP rules? GloBE does not replace the TP rules (the arm’s length pricing, the documentation, the s.92 examination) — it layers the minimum tax on the pricing’s outcome. The jurisdictional split (the ACI) is the intercompany pricing’s result, and the ETR is the ratio the top-up runs on. The Pillar Two for TP teams guide has the interaction (the data duties, the pricing-to-ETR chain, the documentation touchpoints) — the two regimes run in parallel, the TP price feeding the GloBE computation.

Where does the SBIE fit in the GloBE computation? The SBIE (the Substance-Based Income Exclusion) is the carve-out in the top-up base: the substance income (the payroll, the tangible assets — the real economy in the jurisdiction) is excluded from the top-up base (the ACI minus the SBIE). The SBIE is the computation’s relief for the substance — the ETR and SBIE guide has the SBIE’s mechanics (the payroll credit, the PP&E credit, the worked exclusion). The SBIE reduces the top-up base, not the ETR — the ETR is the floor test, the SBIE is the base reduction.