Pillar Two Top-Up Tax

Estimate Pillar Two top-up tax from caller-supplied income, rates, and exclusion.

Description

A Pillar Two top-up scenario applies a rate shortfall to income above a supplied substance exclusion.

A Pillar Two top-up scenario applies a rate shortfall to income above a supplied substance exclusion. Actual global-minimum-tax calculations require detailed jurisdictional rules.^{[1, 2]}

Estimate Pillar Two top-up tax from caller-supplied income, rates, and exclusion.

When to use Pillar Two Top-Up Tax

Use this tool to estimate Pillar Two top-up tax from caller-supplied income, rates, and exclusion.

Choose the specific arithmetic or checklist scenario and establish its input amounts, dates, rates and criteria from the applicable records. Keep currencies, periods and jurisdictions consistent; review the tool-specific assumptions before interpreting the result.

How to use Pillar Two Top-Up Tax and understand its results

Choose the specific arithmetic or checklist scenario and establish its input amounts, dates, rates and criteria from the applicable records. Keep currencies, periods and jurisdictions consistent; review the tool-specific assumptions before interpreting the result.
Enter coveredIncome, effectiveTaxRatePercent, minimumRatePercent, substanceExclusion using the field table and calculation rules, then run the tool.
Read excessProfit, topUpRatePercent, topUpTax. The explanation below defines the units, signs, ordering and any flags or placeholder values.
If the tool reports an input issue, correct the values and run it again. Apply the stated assumptions when interpreting a successfully returned result.

Input field	Meaning	Value type; see rules below	Requirement
coveredIncome	Covered income	number; minimum: 0	Required
effectiveTaxRatePercent	Effective tax rate (%)	number; minimum: 0	Required
minimumRatePercent	Minimum rate (%)	number; minimum: 0	Required
substanceExclusion	Substance-based exclusion	number; minimum: 0	Required

Enter nonnegative income, exclusion and rates. Return excess income, nonnegative rate gap and modeled top-up tax. The minimum rate is an input.

excess=max(0,income−substanceExclusion); gap=max(0,minimumRate−effectiveRate); topUp=excess×gap/100

Units, indexing, boundary conditions and exceptional cases are defined in the calculation rules above.

Output field	Meaning	Value type
excessProfit	Excess profit	number; minimum: 0
topUpRatePercent	Top-up rate (%)	number; minimum: 0
topUpTax	Estimated top-up tax	number; minimum: 0

json

{
  "input": {
    "coveredIncome": 1000,
    "effectiveTaxRatePercent": 10,
    "minimumRatePercent": 15,
    "substanceExclusion": 200
  },
  "output": {
    "excessProfit": 800,
    "topUpRatePercent": 5,
    "topUpTax": 40
  }
}

Limitations and assumptions

This omits jurisdictional blending, covered-tax adjustments, safe harbors, allocation and other GloBE requirements. It is a reduced arithmetic scenario, not a filing calculation.

Numeric inputs must be finite. Follow the calculation-specific rules for overflow, underflow and exceptional cases. Missing required fields, extra fields, wrong value types and violations of the calculation rules are input errors.

Alternative or Complementary methods

Use Worldwide Tax Comparison: Compare caller-parameterized citizenship- and residence-based tax scenarios. For a complementary task, use Thin-Cap Interest Limit: Apply caller-supplied EBITDA and fixed caps to net interest expense.

Further background: Global Minimum Tax.

References

Pillar Two Top-Up Tax — tool.io
Global Minimum Tax — OECD

Similar or alternative tools

Worldwide Tax Comparison
Compare caller-parameterized citizenship- and residence-based tax scenarios.
Thin-Cap Interest Limit
Apply caller-supplied EBITDA and fixed caps to net interest expense.