If the investment entity is treated as tax transparent in the owner’s jurisdiction anyway, then for tax purposes the income of transparent entities is taxed on the underlying owners. However, for accounting purposes, these entities would generally have their own financial accounts.
Given the GloBE rules rely on financial accounting information, specific additional rules are required to correctly allocate the income of transparent entities in a way that reflects most domestic tax treatment.
If special rules weren’t in place and the tax transparent entity was treated as having GloBE income and covered taxes under the standard GloBE rules, its ETR would often be zero and top-up tax would be due.
The purpose of this is again to try and align the GloBE rules with typical domestic tax treatment.
Investment funds are frequently tax-neutral entities under domestic law, with jurisdictions essentially looking to put investors into the fund in the same position for tax purposes as if they had made a direct investment.
Key amendments to the general GloBE rules are:
• Firstly, the financial accounting net income or loss of a transparent entity or reverse hybrid is reduced by any amounts due to owners that aren’t members of the MNE group.
This is necessary as the GloBE ETR of the group members won’t include income or taxes paid by non-group members.
• Secondly, if the transparent entity or reverse hybrid carries our business through a PE, this needs to be deducted from the accounting income of the transparent entity or reverse hybrid, given that permanent establishments (PEs) are treated as separate constituent entities for GloBE purposes.
• Finally, any remaining amount of the financial accounting income or loss is allocated to the owners if the entity is a transparent entity (based on their ownership interest).
This can flow up the chain if there are a number of transparent owners.
On August 8, 2026, Mauritius issued its QDMTT regulations to implement its QDMTT.
On 3 August 2026, Korea’s Ministry of Finance and Economy released its 2026 Tax Reform Proposal. Among its international tax measures are proposed amendments intended to implement significant elements of the OECD/G20 Inclusive Framework’s January 2026 Pillar Two Side-by-Side Package.
Decision No. 12 of 2026 introduces a seven-month registration period, transitional deadlines and a five-year notification regime for UAE entities within the domestic minimum top-up tax framework.
Qatar’s General Tax Authority (GTA) activated its Global and Domestic Minimum Tax registration service through the Dhareeba tax platform on 2 August 2026.
On 30 July 2026, the Portuguese Government published Portaria No. 318/2026/1, approving Model 64 – the Pillar Two Top-up Tax Return – and its accompanying completion instructions. The Ministerial Order entered into force and took effect on 31 July 2026.
Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Monaco for accounting periods beginning on or after December 31, 2026.
Monaco has published draft legislation introducing a Qualified Domestic Minimum Top-up Tax (QDMTT) for multinational enterprise groups. The measure is contained in Bill No. 1129 on the minimum taxation of multinational enterprise groups, dated 14 July 2026 and received by Monaco’s Conseil National on 28 July 2026.
On July 23, 2026, Canada has released a proposed targeted amendment to its Global Minimum Tax Act that would broaden the circumstances in which an intra-group financing or investment arrangement must be neutralised when applying the transitional Country-by-Country Reporting (“CbCR”) safe harbour.
On July 17, 2026, Bill No. 8795 was deposited in the Luxembourg Chamber of Deputies. This would implement the OECD’s January 2026 Side-by-Side package, introduce the permanent Simplified ETR Safe Harbour and extend the Transitional CbCR Safe Harbour.
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