Top-up Tax Percentage
- Applies
- FY2024 onwards
- Reviewed
- Rule
- P2-TUTP-2024.1
What is the Pillar Two Top-up Tax Percentage?
The percentage points by which a jurisdiction's ETR falls below 15%, and never less than nil.
Per GloBE Model Rules (Pillar Two), December 2021, Article 5.2.1, Top-up Tax Percentage
The Top-up Tax Percentage for a jurisdiction for a Fiscal Year is the positive percentage point difference, if any, between the Minimum Rate and the Effective Tax Rate of the jurisdiction determined under Article 5.1.
The rate gap. Applied to the Excess Profit it gives the Jurisdictional Top-up Tax; where the Effective Tax Rate is not below the Minimum Rate it is nil and no Top-up Tax arises on the Excess Profit.
One subtraction, one floor
The formula
- 5.2.1 — Top-up Tax Percentage = Minimum Rate less Effective Tax Rate, as the positive percentage point difference if any
The floor
A rate above the Minimum Rate does not produce a negative percentage that would reduce the tax, or credit it, elsewhere. It produces nil. The floor has a test of its own.
The rate is taken to the fourth decimal place
The Effective Tax Rate is a percentage rounded to the fourth decimal place for the purposes of the Rules — 14.12346% is 14.1235%. That rounded rate is what is subtracted: 14.99996% is 15.0000% and gives nil, while 14.9999% is below the Minimum Rate. The Commentary's example: a rate of 8.18% gives a percentage of 6.82.
The ceiling — a negative rate does not give more than the Minimum Rate
Subtracting a negative Effective Tax Rate would give a percentage above the Minimum Rate. The Commentary to Article 5.2.1 does not allow that: where Adjusted Covered Taxes are negative in a year with GloBE Income, the Excess Negative Tax Expense administrative procedure is mandatory. The negative amount is left out of the year's Adjusted Covered Taxes, so the rate is nil and the percentage is the Minimum Rate, and it is carried forward to reduce Adjusted Covered Taxes in later years in which the jurisdiction has GloBE Income and positive taxes.
Where the rate comes from
The Effective Tax Rate is computed under Article 5.1 and is supplied here as a figure, so the subtraction can be read and cited on its own. A jurisdiction with no Net GloBE Income has no Effective Tax Rate and so no Top-up Tax Percentage.
Order of testing
- 1
Inputs requiring your determination
The Effective Tax Rate must be supplied. An unanswered rate is never read as nil.
- 2
Effective Tax Rate against the Minimum Rate
Below the Minimum Rate, the percentage is the gap. At or above it, the percentage is nil.
- 3
A negative Effective Tax Rate
The percentage is the Minimum Rate, not more: the negative Adjusted Covered Taxes are excluded from the year and carried forward as Excess Negative Tax Expense.
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.
Five points below the minimum
A jurisdiction with an Effective Tax Rate of 10%.
Computed
The Top-up Tax Percentage is 5 percentage points as computed: the Effective Tax Rate of 10% is below the Minimum Rate of 15% for FY2026. It is applied to the Excess Profit under Article 5.2.3 to give the Jurisdictional Top-up Tax. Based on the figures you supplied.
Workings
- Effective Tax RateArticle 5.2.1 — as supplied, from Article 5.1.1
- 10%
- Minimum RateArticle 5.2.1 — published value for FY2026
- 15%
- Top-up Tax PercentageArticle 5.2.1 — the Minimum Rate less the Effective Tax Rate
- 5%
Decided by the effective tax rate against the minimum rate
At the minimum
A jurisdiction with an Effective Tax Rate exactly equal to the Minimum Rate.
Computed
The Top-up Tax Percentage is nil as computed: the Effective Tax Rate of 15% is not below the Minimum Rate of 15% for FY2026, and Article 5.2.1 defines the percentage as the positive percentage point difference if any. Based on the figures you supplied.
Workings
- Effective Tax RateArticle 5.2.1 — as supplied, from Article 5.1.1
- 15%
- Minimum RateArticle 5.2.1 — published value for FY2026
- 15%
- Top-up Tax PercentageArticle 5.2.1 — nil, being defined as the positive percentage point difference if any
- 0%
Decided by the effective tax rate against the minimum rate
The Commentary's example
A jurisdiction with an Effective Tax Rate of 8.18%: the percentage is 6.82 points.
Computed
The Top-up Tax Percentage is 6.82 percentage points as computed: the Effective Tax Rate of 8.18% is below the Minimum Rate of 15% for FY2026. It is applied to the Excess Profit under Article 5.2.3 to give the Jurisdictional Top-up Tax. Based on the figures you supplied.
Workings
- Effective Tax RateArticle 5.2.1 — as supplied, from Article 5.1.1
- 8.18%
- Minimum RateArticle 5.2.1 — published value for FY2026
- 15%
- Top-up Tax PercentageArticle 5.2.1 — the Minimum Rate less the Effective Tax Rate
- 6.82%
Decided by the effective tax rate against the minimum rate
Above the minimum
A jurisdiction with an Effective Tax Rate of 22.5%: the percentage is nil, not negative.
Computed
The Top-up Tax Percentage is nil as computed: the Effective Tax Rate of 22.5% is not below the Minimum Rate of 15% for FY2026, and Article 5.2.1 defines the percentage as the positive percentage point difference if any. Based on the figures you supplied.
Workings
- Effective Tax RateArticle 5.2.1 — as supplied, from Article 5.1.1
- 22.5%
- Minimum RateArticle 5.2.1 — published value for FY2026
- 15%
- Top-up Tax PercentageArticle 5.2.1 — nil, being defined as the positive percentage point difference if any
- 0%
Decided by the effective tax rate against the minimum rate
A negative rate
A profitable jurisdiction whose Adjusted Covered Taxes are negative — a large deferred tax credit on a permanent difference, say — giving an Effective Tax Rate of minus 5%. The percentage is the Minimum Rate, not 20 points; the negative tax is carried forward.
Computed
The Top-up Tax Percentage is 15 percentage points as computed — the Minimum Rate for FY2026, and not the 20 points that subtracting an Effective Tax Rate of -5% would give. A negative rate means negative Adjusted Covered Taxes in a year with GloBE Income, and the Commentary to Article 5.2.1 requires the Excess Negative Tax Expense administrative procedure in that case: the negative amount is excluded from the year's Adjusted Covered Taxes, giving a rate of nil, and is carried forward to reduce Adjusted Covered Taxes in later years in which the jurisdiction has GloBE Income and positive taxes. Based on the figures you supplied.
Workings
- Effective Tax RateArticle 5.2.1 — as supplied, from Article 5.1.1
- -5%
- Effective Tax Rate after excluding the Excess Negative Tax ExpenseCommentary to Article 5.2.1 — the negative Adjusted Covered Taxes are excluded from the year and carried forward, so the rate is nil
- 0%
- Minimum RateArticle 5.2.1 — published value for FY2026
- 15%
- Top-up Tax PercentageArticle 5.2.1 — the Minimum Rate less a rate of nil; it cannot exceed the Minimum Rate
- 15%
Decided by the a negative effective tax rate
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
1 input still need your determination:
- What is the Effective Tax Rate of the jurisdiction for the Fiscal Year under Article 5.1.1, in percent? It is the Adjusted Covered Taxes divided by the Net GloBE Income, and exists only where there is Net GloBE Income. Enter it as computed, before any Excess Negative Tax Expense is excluded; it may be negative.
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
GloBE Model Rules (Pillar Two), December 2021 — Article 5.2.1, Top-up Tax Percentage
The article this rule encodes
https://www.oecd.org/content/dam/oecd/en/publications/reports/2021/12/tax-challenges-arising-from-digitalisation-of-the-economy-global-anti-base-erosion-model-rules-pillar-two_eed81a23/782bac33-en.pdfGloBE Model Rules (Pillar Two), December 2021 — Article 10.1, definition of Minimum Rate
Where the Minimum Rate is defined
https://www.oecd.org/content/dam/oecd/en/publications/reports/2021/12/tax-challenges-arising-from-digitalisation-of-the-economy-global-anti-base-erosion-model-rules-pillar-two_eed81a23/782bac33-en.pdfConsolidated Commentary to the GloBE Model Rules (May 2026) — Commentary to Article 5.2.1, paragraphs 15 to 15.5
The percentage cannot exceed the Minimum Rate: the mandatory Excess Negative Tax Expense procedure
https://www.oecd.org/content/dam/oecd/en/publications/reports/2026/05/tax-challenges-arising-from-the-digitalisation-of-the-economy-consolidated-commentary-to-the-global-anti-base-erosion-model-rules-2026_24289ddf/4377e89f-en.pdf