Global Minimum Tax (Pillar Two): Impact on FDI in India

Global Minimum Tax: What It Means for India FDI

The OECD's Pillar Two introduces a 15% global minimum tax for MNCs with revenue above EUR 750M. India's response will reshape FDI tax planning.

How It Works

If an MNC's effective tax rate in any jurisdiction falls below 15%, the home country can levy a top-up tax. This impacts the value of many India-specific tax incentives.

Impact on India Incentives

• SEZ tax holidays may lose effectiveness for large MNCs
• 15% corporate tax rate for new manufacturing (Section 115BAB) is at the threshold
• PLI cash incentives remain valuable as they're revenue-based, not tax-based

India's Position

India supports the framework but has advocated for higher thresholds. Implementation through Qualified Domestic Minimum Top-up Tax (QDMTT) is being considered.

Restructure your India tax strategy in light of Pillar Two. Talk to our international tax team.