Quick Summary
India is adopting a cautious stance on implementing the OECD-led Pillar 2 tax regime, which mandates a 15% minimum corporate tax rate for multinational enterprises (MNEs) with global revenues exceeding 750 million. Though the government may soon include an enabling provision in the Income Tax Act as part of a broader legislative revamp, full implementation could be delayed due to minimal projected revenue gains, according to official sources. Key Highlights Minimal Revenue Impact: Internal
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FAQ :
The Pillar 2 tax regime mandates a 15% minimum corporate tax rate for multinational enterprises (MNEs) with global revenues exceeding €750 million.
India is considering delaying implementation due to minimal projected revenue gains (estimated at ₹100-200 crore) and concerns about losing sovereign taxation powers.
The regime introduces a 'top-up tax' that could allow other countries to tax MNEs paying less than 15% abroad. India is wary of compromising its legislative autonomy for limited fiscal benefits.
If a low-tax jurisdiction like the UAE enforces its own QDMTT, India might lose the right to collect the additional top-up tax on MNEs operating there, complicating revenue expectations.
Tax experts suggest that Pillar 2 aligns India with global tax standards, helps curb profit shifting, and prevents a 'race to the bottom' among nations, promoting fairer tax distribution for multinationals.
An enabling clause for Pillar 2 is expected to be added to the Income Tax Act, 1961, as part of a broader legislative overhaul anticipated by January.
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