GloBE Calculation Engine

A purpose-built computation engine that handles the complete GloBE effective tax rate and top-up tax calculation, from Article 3 income adjustments through to the final jurisdictional top-up tax amount. Every intermediate step is transparent and fully auditable.

GloBE Income Determination

The starting point for any GloBE calculation is financial accounting net income, but the rules require a series of precise adjustments before you arrive at GloBE income. Pillar2 systematically applies each adjustment defined in the Model Rules so nothing is missed and every figure is traceable to its source.

  • Starts from financial accounting net income under the group's consolidated accounting standard
  • Excluded dividends and equity gains or losses: properly identifies and removes qualifying participations
  • Policy disallowed expenses including fines, penalties, and illegal payments
  • Asymmetric foreign currency gains and losses, pension fund adjustments, and stock-based compensation elections
  • Prior period errors and changes in accounting principles handled through recast provisions
  • Intragroup transaction adjustments and allocation of income for permanent establishments and flow-through entities
[ Waterfall chart showing the bridge from financial accounting net income to net GloBE income with each adjustment category ]

Adjusted Covered Taxes

Computing the tax numerator in the ETR fraction is one of the most technically demanding parts of Pillar 2. Pillar2 handles the full scope of covered tax adjustments so you can be confident in the resulting jurisdictional ETR.

  • Current tax expense adjustments: identifies and removes taxes not attributable to GloBE income, CFC tax allocations, and disqualified refundable tax credits
  • Deferred tax adjustments with automatic recasting of deferred tax assets and liabilities to the 15% minimum rate where recorded at a higher domestic rate
  • Tracks the total deferred tax adjustment amount and applies the GloBE loss election where chosen by the group
  • Post-filing adjustments and tax audit outcomes allocated to the correct fiscal year under the recapture rules
  • Qualified refundable tax credits and marketable transferable tax credits properly treated as income reductions rather than covered taxes
[ Covered taxes computation detail showing current tax, deferred tax, and adjustment line items rolling up to the adjusted covered taxes total ]

ETR, Exclusions, and Top-Up Tax

Once GloBE income and adjusted covered taxes are determined for each jurisdiction, Pillar2 computes the effective tax rate, applies the substance-based income exclusion, and calculates the precise top-up tax amount. The engine handles transitional rates, blending rules, and minority interest adjustments automatically.

  • Jurisdictional ETR computed as adjusted covered taxes divided by net GloBE income, with proper treatment of loss jurisdictions
  • Top-up tax percentage equal to 15% minus the jurisdictional ETR, floored at zero
  • Substance-based income exclusion using the payroll carve-out and tangible asset carve-out, applying the correct transitional percentages for the fiscal year
  • Excess profit determination as net GloBE income less the SBIE amount, with jurisdictional top-up tax calculated on the excess
  • Additional current top-up tax for any QDMTT shortfall, with de minimis and prior year recapture provisions
[ Jurisdictional ETR summary table showing income, taxes, ETR, top-up percentage, SBIE amount, excess profit, and final top-up tax for each jurisdiction ]

Get the computation right. Every jurisdiction, every period.

Pillar 2 calculations involve hundreds of interacting rules. See how Pillar2 turns complexity into a structured, repeatable process.

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