On 5 Jan 2026, the OECD/G20 Inclusive Framework released the Pillar Two “Side-by-Side Package” as Administrative Guidance to the Global Anti-Base Erosion (GloBE) Model Rules, intended to be incorporated into the GloBE Commentary.
The Inclusive Framework presents the Global Minimum Tax (GMT) as a substantial policy initiative that supports stability in the international tax system through a common approach. To preserve these benefits while providing greater stability, simplicity and certainty, the Inclusive Framework has agreed a package of measures relating to the GMT, covering material simplifications, closer alignment in the treatment of substance-based tax incentives with the approach for qualified refundable tax credits, and a Side-by-Side (SbS) system. The Package was agreed against an explicit commitment to address substantial level playing field risks, alongside base erosion and profit shifting (BEPS) risks. In practical terms, it delivers a set of coordinated measures across three areas:
- Material simplifications, including a permanent Simplified ETR Safe Harbour (SESH), a one-year extension of the Transitional CbCR Safe Harbour (TCSH) to support an orderly transition, and a work programme (including streamlining reporting such as the GIR framework).
- A Substance-based Tax Incentive (SBTI) Safe Harbour, aimed at allowing continued benefit from certain incentives viewed as strongly linked to economic substance, within a capped mechanism.
- A Side-by-Side (SbS) system, introducing the SbS Safe Harbour and UPE Safe Harbour for groups headquartered in jurisdictions with qualifying regimes, supported by governance features such as the Central Record process and a longer-term stocktake, while preserving the continued application of QDMTTs.
This matters because the Package introduces multiple elective relief mechanisms and clarifies how and when they may apply, which can materially affect both compliance workload and Pillar Two outcomes across FYs starting from 2026–2027, depending on implementation. The next section briefly outlines the Package’s three areas before summarising the key safe harbours in a consolidated table.
