OECD: Agreement reached on Pillar Two side-by-side package
Allowing for continued coordinated operation of Pillar Two global minimum tax arrangements
The Organisation for Economic Co-operation and Development (OECD) today announced that the OECD/G20 Inclusive Framework on base erosion and profit shifting (BEPS) has reached agreement on key elements of a “side-by-side” package allowing for continued coordinated operation of Pillar Two global minimum tax arrangements.
According to the OECD release, the comprehensive side-by-side package preserves the gains achieved so far in the global minimum tax framework and protects the ability for all jurisdictions, particularly developing countries, to have first taxing rights over income generated in their jurisdictions.
The package includes five key components:
- A series of simplification measures that will reduce compliance burdens for multinational enterprises (MNEs) and tax authorities in calculating and reporting under the Pillar Two global minimum tax rules
- Further alignment of the treatment of tax incentives globally through the introduction of a new targeted substance-based tax incentive safe harbor
- New safe harbors for MNE Groups having an ultimate parent entity located in an eligible jurisdiction that meets minimum taxation requirements
- An evidence-based stocktake process to ensure a level playing field is maintained for all Inclusive Framework members
- Reinforcement of the objective that qualified domestic minimum top-up tax regimes remain a primary mechanism in the global minimum tax framework for ensuring the protection of local tax bases, particularly in developing countries
Read a January 2026 report prepared by KPMG LLP that provides an overview and preliminary observations on the side-by-side package.