Pillar Two Glossary
Plain-language definitions of the key terms in Pillar Two, GIRN filing, and the OECD GloBE rules, the reference you need before (or after) you file.
A
- Adjusted Covered Taxes
- The total covered taxes for a constituent entity in a jurisdiction, adjusted for timing differences and other items under the GloBE rules, used to calculate the effective tax rate.
- Annual Transition Period
- A transition measure under Pillar Two allowing certain simplifications in computing GloBE income or covered taxes for the first three years in which an MNE group becomes subject to the rules.
C
- CbCR (Country-by-Country Report)
- An OECD-standard annual report filed by large MNEs that sets out revenue, profit/loss, taxes, employees, and assets broken down by jurisdiction. The CbCR is the primary data source for preparing a GIRN.See also: GIRN (Global Information Return Notification), MNE Group
- Constituent Entity
- Any entity or permanent establishment within an MNE group that is consolidated for financial reporting purposes, including subsidiaries, branches, and the Ultimate Parent Entity itself.See also: MNE Group, UPE (Ultimate Parent Entity)
- CRA (Canada Revenue Agency)
- The federal government agency responsible for administering Canada's tax laws, including the Global Minimum Tax Act. The CRA receives GIRN filings via the SERS API.See also: CRA SERS API
- CRA SERS API
- The CRA's Special Elections and Returns System (SERS) API. An authorized electronic channel used by certified software providers (including Pillar2 Pathway) to transmit Pillar Two filings directly to the CRA via REST/JSON or XML endpoints, `fileGirNotification` for the GIRN, `fileGirReturn` for the GIR, and `fileGmtReturn` for the GMTR.See also: CRA (Canada Revenue Agency), GIRN (Global Information Return Notification)
- Covered Taxes
- Taxes that are recognized for GloBE ETR calculation purposes, primarily income taxes recorded in a jurisdiction's financial statements. Covered taxes exclude indirect taxes (e.g., VAT/GST) and payroll taxes.See also: Effective Tax Rate (ETR), GloBE (Global Anti-Base Erosion)
D
- DAC (Digital Access Code)
- A one-time code issued by the CRA to first-time electronic filers. The DAC allows an entity to authenticate with CRA My Business Account before establishing permanent online filing credentials. Required for entities that have never filed electronically with the CRA.See also: CRA (Canada Revenue Agency)
- Designated Filing Entity (DFE)
- An entity within an MNE group that is authorized to file the GIRN or GIR on behalf of all (or some) constituent entities in a jurisdiction, reducing duplication of filings.See also: Constituent Entity, GIRN (Global Information Return Notification)
E
- Effective Tax Rate (ETR)
- The blended effective tax rate for all constituent entities in a single jurisdiction, calculated as adjusted covered taxes divided by net GloBE income for that jurisdiction. Under Pillar Two, the minimum ETR is 15%.See also: GloBE (Global Anti-Base Erosion), Top-Up Tax
G
- GIR (Global Information Return)
- The group-level information return that reports the MNE group's Pillar Two data to the CRA. It is filed by a Canadian-resident Ultimate Parent Entity or another designated filing entity acting in that role. The GIRN is different: Canadian constituent entities file the GIRN to tell the CRA where the group's GIR is filed and which entity filed it, not to replace the GIR itself.See also: GIRN (Global Information Return Notification), UPE (Ultimate Parent Entity)
- GIRN (Global Information Return Notification)
- The notification Canadian constituent entities file with the CRA when they are part of an in-scope multinational enterprise group, including Canadian subsidiaries of foreign-parented MNEs, under the Global Minimum Tax Act. It applies to MNE groups with consolidated annual revenue of €750 million or more in at least two of the four preceding fiscal years. Submitted electronically via the CRA Special Elections and Returns System (SERS) `fileGirNotification` endpoint.See also: CRA SERS API, GIR (Global Information Return), GMTR (Global Minimum Tax Return)
- GloBE (Global Anti-Base Erosion)
- The OECD model rules framework underlying Pillar Two. Also called the GloBE Rules. Establishes how GloBE income, covered taxes, effective tax rates, and top-up tax are computed across jurisdictions.See also: IIR (Income Inclusion Rule), UTPR (Undertaxed Profits Rule), QDMTT (Qualified Domestic Minimum Top-up Tax)
- GloBE Income
- The net income of a constituent entity for GloBE purposes, derived from its financial accounting income with specific adjustments prescribed by the GloBE Rules, the denominator in the ETR calculation.See also: Effective Tax Rate (ETR), GloBE (Global Anti-Base Erosion)
- Global Minimum Tax Act
- Canada's domestic legislation implementing the OECD Pillar Two framework. Enacted in 2024, it applies to fiscal years beginning after December 30, 2023, and introduces the IIR, UTPR, and QDMTT into Canadian law.See also: IIR (Income Inclusion Rule), UTPR (Undertaxed Profits Rule), QDMTT (Qualified Domestic Minimum Top-up Tax)
- GMTR (Global Minimum Tax Return)
- The return used to report and pay Global Minimum Tax (top-up tax) owed under Canada's Income Inclusion Rule (IIR), Undertaxed Profits Rule (UTPR), or Qualified Domestic Minimum Top-up Tax (QDMTT). Submitted to the CRA SERS API via the `fileGmtReturn` endpoint. Unlike the GIRN, which is primarily a disclosure notification, the GMTR reflects a payment obligation.See also: IIR (Income Inclusion Rule), UTPR (Undertaxed Profits Rule), GIRN (Global Information Return Notification)
I
- IIR (Income Inclusion Rule)
- The primary Pillar Two rule that requires a parent entity to pay top-up tax on the low-taxed income of its subsidiaries. The IIR operates from the top of the ownership chain downward.See also: UTPR (Undertaxed Profits Rule), Top-Up Tax, GloBE (Global Anti-Base Erosion)
J
- Jurisdictional Blending
- The GloBE approach of calculating a single combined ETR for all constituent entities in the same jurisdiction, rather than entity-by-entity. This can prevent low-tax entities from being individually subject to top-up tax if offset by higher-taxed entities in the same country.See also: Effective Tax Rate (ETR), GloBE (Global Anti-Base Erosion)
M
- MNE Group
- Multinational Enterprise group, a group of entities with operations in more than one jurisdiction that are consolidated under one Ultimate Parent Entity. Pillar Two applies to MNE groups with consolidated annual revenue ≥ €750 million in at least two of the four preceding fiscal years.See also: UPE (Ultimate Parent Entity), Constituent Entity
O
- OECD Pillar Two
- The second pillar of the OECD/G20 Inclusive Framework on BEPS, the Base Erosion and Profit Shifting project. Pillar Two establishes a global minimum effective tax rate of 15% for large MNE groups. Canada implemented it via the Global Minimum Tax Act.See also: GloBE (Global Anti-Base Erosion), Global Minimum Tax Act
P
- Permanent Establishment (PE)
- A fixed place of business through which the business of an enterprise is wholly or partly carried on. PEs may be constituent entities for GloBE purposes and may trigger separate GIRN filing obligations.See also: Constituent Entity
Q
- QDMTT (Qualified Domestic Minimum Top-up Tax)
- A domestic minimum tax that allows a jurisdiction to collect top-up tax before a foreign IIR or UTPR can apply. Canada has enacted a QDMTT, which means foreign parent IIRs are displaced by Canada's domestic collection right for Canadian entities.See also: IIR (Income Inclusion Rule), UTPR (Undertaxed Profits Rule)
S
- SBIE (Substance-Based Income Exclusion)
- A carve-out reducing the amount of income subject to top-up tax, based on payroll costs and the net book value of tangible assets in a jurisdiction. Designed to protect genuine economic activity from top-up tax.See also: Top-Up Tax, GloBE (Global Anti-Base Erosion)
- SERS (Special Elections and Returns System)
- The CRA's electronic submission system for Pillar Two and related filings. Certified software providers use REST/JSON or XML requests against SERS endpoints, including `fileGirNotification` for the GIRN, `fileGirReturn` for the GIR, and `fileGmtReturn` for the GMTR, to transmit returns on behalf of taxpayers. SERS is the prescribed channel to transmit GIRN and other Pillar Two filings electronically.See also: CRA SERS API, GIRN (Global Information Return Notification)
T
- Top-Up Tax
- The additional tax imposed under Pillar Two when an MNE group's effective tax rate in a jurisdiction falls below 15%. Top-up tax equals the ETR shortfall (15% minus actual ETR) multiplied by the MNE's excess profit in that jurisdiction.See also: Effective Tax Rate (ETR), IIR (Income Inclusion Rule), QDMTT (Qualified Domestic Minimum Top-up Tax)
- Transition Year
- The first fiscal year in which an MNE group becomes subject to the GloBE rules. Special simplified safe harbours are available in the transition year and the following two years.See also: Annual Transition Period
U
- UPE (Ultimate Parent Entity)
- The entity at the top of the MNE group's ownership chain that is not majority-owned by any other entity. The UPE is typically responsible for preparing the group's consolidated financial statements.See also: MNE Group, GIR (Global Information Return)
- UTPR (Undertaxed Profits Rule)
- A backstop Pillar Two rule that allows jurisdictions where constituent entities are located to collect top-up tax that was not collected by an IIR at the parent level. Sometimes called the Undertaxed Payments Rule in earlier OECD documentation.See also: IIR (Income Inclusion Rule), Top-Up Tax
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Now that you know the terminology, the filing itself is straightforward. Pillar2 Pathway walks you through every step.