Analysis of Finlands Latest Draft Law to Implement the January 2026 OECD Side-by-Side Package

On February 12, 2026, Finland issued Draft Law HE 6/2026 vp (Draft Law). This is a supplementary government bill to HE 196/2025 vp (another draft bill) that adds aspects that HE 196/2025 vp had not previously proposed to amend.

In summary, the Draft Law does four things. It adds a Side-by-Side Safe Harbour, a UPE Safe Harbour, a Substance-based Tax Incentive Safe Harbour, and it extends the Transitional CbCR Safe Harbour by one year. These changes are based on Article 32 of Directive (EU) 2022/2523 and on the OECD/G20 Inclusive Framework’s January 5, 2026 Side-by-Side Package. It also states that the Simplified ETR Safe Harbour will be dealt with in a separate government bill later in 2026.

Method of Implementation

Under Section 81 of Finland’s Constitution both tax liability and the tax amount must be determined by statute and cannot rest on preparatory works or non-binding instruments. The Draft Law therefore does not attempt to let OECD guidance operate on its own as soft law. Instead, it places the operative tax consequences in the Minimum Tax Act itself, while using the Inclusive Framework’s special peer review and OECD Central Record to identify when a foreign jurisdiction has a qualified regime for purposes of sections 12 and 13 (SBS and UPE Safe Harbours). 

Chapter 9, section 12: Side-by-Side Safe Harbour

Section 12(1) implements the OECD rule in Chapter 5, Side-by-Side Safe Harbour, box paragraphs 1–3. At the election of the filing constituent entity, the jurisdictional top-up tax connected to the income inclusion rule (IIR) and the undertaxed profits rule (UTPR) is deemed to be zero for the constituent entities to which the safe harbour applies, provided the group’s UPE is located in a jurisdiction that the Inclusive Framework’s special peer review has found to have a Qualified SbS Regime. The Finnish text and the OECD rule are aligned in substance.

The first consequence is that the provision is limited to IIR and UTPR exposure. It does not switch off QDMTT liability. That is explicit in the OECD package, which states that all MNE groups, including those eligible for the SbS or UPE safe harbours, remain subject to QDMTTs in QDMTT jurisdictions. The Finnish preparatory text says the same in substance and notes that, because Finland has a domestic top-up tax, the Side-by-Side model will generally not directly affect the taxation of Finnish-located constituent entities in the same way it affects the IIR/UTPR architecture.

The second consequence is interpretive. Section 12 does not define “Qualified SbS Regime” in Finnish statutory text. A practitioner therefore cannot stop at the statute. The substantive OECD criteria in Chapter 5 remain essential: a qualified SbS jurisdiction must have an eligible domestic tax system, an eligible worldwide tax system, must grant a foreign tax credit for QDMTTs on the same terms as other creditable covered taxes, and must have enacted the relevant systems before 1 January 2026 or access later through the Inclusive Framework procedure. In other words, the Finnish provision adopts the OECD qualification mechanism rather than restating the qualification criteria.

That drafting choice is legally significant. Qualification is mediated through the Inclusive Framework’s special peer review and the Central Record. That reduces domestic discretion, but it also means that the statute and the OECD administrative guidance must be read together. 

Section 12(2) extends the same zeroing rule to the portion of top-up tax attributable to a constituent entity’s interest in a joint venture or JV subsidiary. This tracks the OECD Side-by-Side Safe Harbour box paragraph 2. The important limitation appears in both the OECD commentary and the Finnish reasons: the relief is group-specific. It does not affect the application of the IIR or UTPR to some other MNE group’s interest in the same JV or JV subsidiary.

Chapter 9, section 13: UPE Safe Harbour

Section 13 is narrower than section 12. It implements the OECD UPE Safe Harbour in Chapter 5, box paragraphs 1–4 and commentary paragraphs 33–42. At the election of the filing constituent entity, the top-up tax connected to the UTPR for the UPE jurisdiction is deemed to be zero for constituent entities located in that UPE jurisdiction, if the UPE is located in a jurisdiction that the Inclusive Framework’s special peer review has found to have a Qualified UPE Regime.

The key distinction from section 12 is structural. Section 13 gives relief only from the UTPR, and only with respect to profits located in the UPE jurisdiction. It does not create a group-wide safe harbour from IIR and UTPR. In OECD design terms, it is a narrower fallback rule for jurisdictions that meet the domestic but not the worldwide criteria required for the full Side-by-Side system.

Again, the qualifying criteria are not reproduced in Finnish statutory text. Under OECD Chapter 5, a jurisdiction has a Qualified UPE Regime if it has an eligible domestic tax system and that domestic system was enacted and in effect on 1 January 2026. The eligible domestic system requires, in substance, a nominal corporate tax rate of at least 20%, a QDMTT or financial-accounting-based corporate alternative minimum tax at a nominal rate of at least 15% applying to a substantial portion of in-scope domestic profits, and no material risk that in-scope MNE groups headquartered in that jurisdiction will be subject to an effective domestic tax rate below 15%. Section 13 therefore also depends on OECD Chapter 5 for content, even though the domestic legal consequence is written into Finnish law.