Excel Sample for the Simplified ETR Safe Harbour

On January 5, 2025, the OECD released guidance on the operation of the long awaiting Side-by-Side Tax Package (see: Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two), Side-by-Side Package). This included a new Simplified ETR Safe Harbour for financial years from December 31, 2026, however, it can apply from December 31, 2025 in certain cases (eg if the QDMTT Safe Harbour applied or only 1 jurisdiction had GloBE taxing rights for that jurisdiction). 

This new Safe Harbour deems the top-up tax for a jurisdiction to be zero where the MNE group has Simplified ETR of at least 15% (or a Simplified Loss). The Simplified ETR is calculated as Simplified Taxes/ Simplified Income. There are, however, a lot of adjustments and elections that apply in the OECD Guidance.

In this members-only excel file we break down the key aspects to the Simplified ETR Safe Harbour calculation, including the elements of simplified income and simplified taxes and the numerous adjustments required (and available elections) to provide an overview for how the calculation will operate.