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Qualified Domestic Minimum Top-up Tax

Applies
FY2024 onwards
Reviewed
Rule
P2-QDMTT-2024.1
By

What makes a domestic minimum tax a QDMTT?

It computes excess profits as the GloBE Rules do, raises tax on them to 15%, and is run consistently with the rules. It reduces GloBE top-up tax.

Per GloBE Model Rules (Pillar Two), December 2021, Article 10.1, definition of Qualified Domestic Minimum Top-up Tax

A Qualified Domestic Minimum Top-up Tax is a minimum tax included in the domestic law of a jurisdiction that determines the Excess Profits of the Constituent Entities located in the jurisdiction in a manner equivalent to the GloBE Rules; operates to increase domestic tax liability with respect to those Excess Profits to the Minimum Rate; and is implemented and administered in a way that is consistent with the outcomes provided for under the GloBE Rules and the Commentary, provided that the jurisdiction does not provide any benefits that are related to such rules. It may compute domestic Excess Profits on an Acceptable or Authorised Financial Accounting Standard rather than the standard of the Consolidated Financial Statements. The Jurisdictional Top-up Tax is reduced by the amount of Qualified Domestic Minimum Top-up Tax.

It lets a jurisdiction collect the top-up tax on its own low-taxed profits before any other jurisdiction can. It is a credit against the GloBE Top-up Tax, not a Covered Tax — and not, by itself, a switch-off.

Functionally equivalent, and credited after the rate is computed

The three limbs

  • (a) Domestic Excess Profits determined in a manner equivalent to the GloBE Rules
  • (b) Tax on them raised to the Minimum Rate
  • (c) Implemented and administered consistently with GloBE outcomes — with no related benefits

Where it may differ

It may use a local accounting standard; reach groups below the revenue threshold and purely domestic groups; have no substance carve-out, or a narrower one; and have no de minimis exclusion. It need not have a GloBE Loss Election.

Where it may not

Its rate may not be below the Minimum Rate. A carve-out may not be broader, or at a higher percentage, than the Substance-based Income Exclusion. A de minimis exclusion may not have higher thresholds. It must not systematically produce less tax for the jurisdiction than the GloBE Rules would.

Not if conditional

A domestic minimum top-up tax that is an Explicitly Conditional Tax is not qualified, subject to a time-limited derogation shown in the Central Record.

A credit, not an exemption

It is not a Covered Tax and does not enter the Effective Tax Rate. It reduces the Jurisdictional Top-up Tax, not below nil; a difference is still charged under the Income Inclusion Rule or the Undertaxed Profits Rule. Only the QDMTT Safe Harbour, with its further standards, turns the GloBE computation off.

Payable means accrued and not contested

The amount credited is the domestic top-up tax accrued for the Fiscal Year, leaving out any amount the group challenges in a judicial or administrative proceeding, or that the tax authority has determined is not assessable or collectible on constitutional grounds, other superior law or a specific agreement such as a tax stabilisation agreement. An amount left out is credited, for the year it relates to, once it is paid and no longer contested. A domestic tax larger than the GloBE figure gives no refund and no credit against later years.

Who decides

Qualified status is settled between jurisdictions through the Inclusive Framework. The result here is the reader's own assessment against the definition.

Order of testing

  1. 1

    Inputs requiring your determination

    Every input the computation reaches must be supplied; nil is entered, not left blank.

  2. 2

    The definition of a Qualified Domestic Minimum Top-up Tax

    All three limbs, the rate, and no conditionality.

  3. 3

    The credit against the Jurisdictional Top-up Tax

    Article 5.2.3 — reduced, not below nil.

Examples

Illustrative scenarios — ours, not the authority’s — each computed live by this rule. Change any fact and the outcome is the rule’s, not a hand-written answer.

A domestic tax that matches the GloBE figure

A EUR 10 million Jurisdictional Top-up Tax and a EUR 10 million Qualified Domestic Minimum Top-up Tax.

Computed

The domestic minimum tax meets the definition of a Qualified Domestic Minimum Top-up Tax on your assessment, at a rate of 15% against a Minimum Rate of 15%, and the EUR 10,000,000 payable reduces the Jurisdictional Top-up Tax of EUR 10,000,000 to EUR 0 as computed (Article 5.2.3). Nothing remains to be charged under the Income Inclusion Rule or the Undertaxed Profits Rule for the Fiscal Year. It is not a Covered Tax and does not enter the Effective Tax Rate. Qualified status itself is settled through the Inclusive Framework's process, not by this rule. Based on the figures you supplied.

Workings

Jurisdictional Top-up Tax before the creditArticle 5.2.3 — as supplied
EUR 10,000,000
Qualified Domestic Minimum Top-up Tax payableArticle 5.2.3 — credited in full
(EUR 10,000,000)
Jurisdictional Top-up Tax remainingArticle 5.2.3 — not below nil
EUR 0

Decided by the credit against the jurisdictional top-up tax

A domestic tax on local accounts that comes out lower

The same Top-up Tax against EUR 7 million of domestic tax.

Computed

The domestic minimum tax meets the definition of a Qualified Domestic Minimum Top-up Tax on your assessment, at a rate of 15% against a Minimum Rate of 15%, and the EUR 7,000,000 payable reduces the Jurisdictional Top-up Tax of EUR 10,000,000 to EUR 3,000,000 as computed (Article 5.2.3). The remainder is still charged under the Income Inclusion Rule or the Undertaxed Profits Rule: a QDMTT may be computed on local accounts or with a narrower base, and is a credit, not a switch-off. It is not a Covered Tax and does not enter the Effective Tax Rate. Qualified status itself is settled through the Inclusive Framework's process, not by this rule. Based on the figures you supplied.

Workings

Jurisdictional Top-up Tax before the creditArticle 5.2.3 — as supplied
EUR 10,000,000
Qualified Domestic Minimum Top-up Tax payableArticle 5.2.3 — credited in full
(EUR 7,000,000)
Jurisdictional Top-up Tax remainingArticle 5.2.3 — not below nil
EUR 3,000,000

Decided by the credit against the jurisdictional top-up tax

A minimum tax at 12%

A domestic minimum tax whose rate is below the Minimum Rate.

Computed

The domestic minimum tax is not a Qualified Domestic Minimum Top-up Tax on your assessment: its rate of 12% is below the Minimum Rate of 15%, so it does not increase the tax on those profits to the Minimum Rate (paragraph (b)). It is not credited against the Jurisdictional Top-up Tax under Article 5.2.3. A domestic minimum tax that is not qualified is a Covered Tax if it otherwise meets that definition, and then counts in the Effective Tax Rate instead — unless it is an Explicitly Conditional Tax. Whether a jurisdiction's tax has qualified status is settled through the Inclusive Framework's process. Based on what you supplied.

Decided by the definition of a qualified domestic minimum top-up tax

A top-up tax with a matching subsidy

A domestic top-up tax handed back through a related grant.

Computed

The domestic minimum tax is not a Qualified Domestic Minimum Top-up Tax on your assessment: the jurisdiction provides benefits related to it (paragraph (c)). It is not credited against the Jurisdictional Top-up Tax under Article 5.2.3. A domestic minimum tax that is not qualified is a Covered Tax if it otherwise meets that definition, and then counts in the Effective Tax Rate instead — unless it is an Explicitly Conditional Tax. Whether a jurisdiction's tax has qualified status is settled through the Inclusive Framework's process. Based on what you supplied.

Decided by the definition of a qualified domestic minimum top-up tax

Try it

Supply the facts and this rule computes the outcome in your browser, live. Leave a determination undecided and it blocks the result — it is never read as a no.

Not computed yet

5 inputs still need your determination:

  • Does the domestic minimum tax determine the Excess Profits of the Constituent Entities located in the jurisdiction in a manner equivalent to the GloBE Rules — the same architecture, with any carve-out or exclusion no more generous?
  • What rate does the domestic minimum tax bring the tax on domestic Excess Profits up to, as a percentage?
  • Is it implemented and administered in a way that is consistent with the outcomes provided for under the GloBE Rules and the Commentary?
  • Does the jurisdiction provide any benefits that are related to the domestic minimum tax?
  • Is the domestic minimum tax an Explicitly Conditional Tax — one that applies on the condition that a Qualified IIR or UTPR applies to the entity in another jurisdiction, or does not apply where none does? See explicitly-conditional-taxes.

Computed in your browser from the figures you supply. Nothing is sent anywhere, and the result is a computation against a rule — reference, not tax advice.

Thresholds

pillar_two.minimum_rate
15% · reviewed 2026-10-04 · source

Threshold values are published separately from the rule and carried with a citation. Where none has been published for the period being computed, the rule reports that rather than applying a default.

Sources

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Reference, not tax advice.

Pankaj Agarwal — Tax Technology Leader