Pillar II: Global Minimum Tax
Global developments, US tensions and the road for 2026.
The year 2025 marked a turning point in the implementation of Pillar Two, the central component of the OECD/G20 Base Erosion and Profit Shifting (BEPS 2.0) project designed to ensure that large multinational enterprise groups pay a minimum effective tax rate of 15% in each jurisdiction where they operate. For businesses, this represents a fundamental shift in how global tax is calculated, managed and forecast. After several years of negotiations and model rules, 2025 was the year in which the global minimum tax framework moved decisively from design to practice. By the end of the year, the key question for governments, tax authorities and businesses was no longer whether Pillar Two would happen, but how to make it work in a technically robust and operationally sustainable way.
In this article we intend to look back at the main developments of 2025 regarding the Global Minimum Tax, focusing on global implementation trends, the political tensions around Section 899 and the "side-by-side" proposal, together with some practical considerations that multinational groups should take into 2026.
A global snapshot at the end of 2025
During 2025, Pillar Two clearly established itself as a central reference point for international corporate taxation. By December 2025, more than 55 jurisdictions had legislation in force and approximately 10 further territories had legislation in progress (including cases benefiting from a six-year extension). However, at the same time, approximately another 60 territories had not yet made a public announcement. In any case, many of these jurisdictions had signalled their intention to implement the Global Anti-Base Erosion (GloBE) rules, reinforcing the perception that Pillar Two is becoming the default framework for large multinational groups.
Throughout 2025, the OECD/G20 Inclusive Framework continued to refine the architecture of the global minimum tax. Additional Administrative Guidance and an updated template for the GloBE Information Return clarified key issues around deferred taxes, tax credits, transitional rules and the interaction between domestic and GloBE-based minimum taxes. In parallel, the work done on multilateral competent authority agreements and technical specifications prepared the ground for a broader exchange of Pillar Two information from 2026 onwards.
None of this removed the complexity of the rules, but it did give taxpayers and administrations a clearer sense of how the system is expected to operate in practice.
US policy shifts, Section 899 and the "side-by-side" compromise
Within this global picture, developments in the United States played a disproportionate role in shaping expectations around Pillar Two. Early in 2025, the Trump administration backed a proposal for new Section 899 of the Internal Revenue Code, widely described as a "revenge tax". The proposed measure would have imposed higher US taxes on certain non-US companies and individuals where their home jurisdictions levied what the US considered "unfair foreign taxes" on US taxpayers, including Pillar Two-style top-up taxes. For observers, this was a clear signal that the US government was prepared to retaliate against other countries' use of the UTPR and similar tools.