A Practical Pillar 2 Guidance for Turkish Subsidiaries of the Multinationals
OECD Pillar 2 introduces a global minimum effective tax rate of 15% for large business groups. Türkiye is an early and comprehensive adopter of this framework. Pillar 2 regulations apply to Turkish subsidiaries of multinational enterprise (MNE) groups whose consolidated annual revenue exceeds EUR 750 million in at least two of the last four fiscal years. It is particularly relevant for groups whose ultimate parent company will begin implementing OECD Pillar 2 rules from 2025 onwards. Key Turkish Pillar 2 measures are:
- QDMTT (Qualifying Domestic Minimum Top-up Tax) – effective from 1 January 2024
- IIR (Income Inclusion Rule) – effective from 1 January 2024
- UTPR (Undertaxed Profits Rule) – effective from 1 January 2025
When Does it Apply?
For the 2024 fiscal year, since Türkiye’s rules are already in force while the parent jurisdiction has not yet implemented Pillar 2, in the case that Turkish subsidiaries total effective tax rate is below the 15% minimum, domestic top-up tax will be paid in Türkiye. From 2025 onwards, although the parent jurisdiction may apply IIR, Türkiye’s qualifying domestic top-up tax still takes priority. As a result, top-up tax is paid in Türkiye and credited at parent level, preventing double taxation and preserving Türkiye’s primary taxing right.
Liabilities of Turkish Subsidiaries
Turkish subsidiaries are directly responsible for calculating and settling any top-up tax arising under the QDMTT where their jurisdictional effective tax rate falls below the 15% global minimum. Turkish subsidiaries must file a separate Global Minimum Tax Return (Küresel ATV Beyannamesi) in Türkiye, including the GIR notification as an annex. This return is distinct from the annual CIT return. Additionally, it is required to file a QDMTT return by the end of 2025 in Türkiye, even if no top-up tax is due. Accordingly, Turkish subsidiaries are liable to declare:
- QDMTT Return-12 months after the end of the calendar year.
- Global Minimum Tax Return (Küresel ATV Beyannamesi) with GIR notification in its annex- 15 months after the end of the calendar year (for 2024, it will be filed by the end of June, 2026).
GloBE Information Return (GIR) Filing Obligation
The GloBE Information Return (GIR) is a standardised report detailing the MNE group’s Pillar 2 calculations and may generally be filed by a single designated entity on behalf of the group. However, Turkish subsidiaries remain subject to local obligations and are required to notify the Turkish tax authorities of the entity responsible for filing the GIR and its jurisdiction in the annex of Global Minimum Tax Return (Küresel ATV Beyannamesi). They must also be prepared to submit the GIR locally if no designated reporting entity is appointed or if effective information exchange mechanisms with Türkiye are not in place.
A summary of Pillar 2 documentation obligations in Türkiye is provided in the below table.
| QDMTT Return | Global Minimum Tax Return | GloBE Information Return (GIR) | GIR Notification | |
|---|---|---|---|---|
|
What? |
· QDMTT Return includes information on jurisdictional effective tax rate, top-up tax obligations and safe harbour implementations. on Turkish subsidiaries if any. QDMTT return is filed even if no top-up tax is due |
· Global Minimum Tax Return includes MNE Group’s global effective and top-up tax status. Foreign MNE’s GloBE Information Return (GIR) of the Group is submitted as an annex to this return |
· The GloBE Information Return (GIR) is a report detailing the MNE group’s Pillar 2 calculations and may generally be filed by a single designated entity on behalf of the group |
· In the case that GIR is declared by any other foreign subsidiaries, GIR notification will be provided in the Global Minimum Tax Return’s annex |
|
When? |
· 12 months after the end of the calendar year. |
· 15 months after the end of the calendar year (For 2024, 18 months) |
· 15 months after the end of the calendar year (For 2024, 18 months) |
· 15 months after the end of the calendar year (For 2024, 18 months) |
|
Who? |
· Türkiye headquartered Turkish MNEs and Turkish subsidiaries of in-scope MNE Groups |
· Turkish subsidiaries of in-scope MNE Groups |
· Generally, Ultimate Parent Company of the Group is the designated entity. However Turkish subsidiaries should also be prepared to submit the GIR locally if no designated reporting entity is appointed or if effective information exchange mechanisms with Türkiye are not in place. |
· Türkiye headquartered Turkish MNEs and Turkish subsidiaries of in-scope MNE Groups |
You can contact us for your questions on our guidance and Pillar 2 liabilities of Turkish subsidiaries of foreign MNEs.
