Importantly, unlike when determining the revenue for the purposes of the revenue threshold, consolidation adjustments that eliminate intra-group transactions are excluded.
The financial accounting net income or loss is based on the accounting standard used to prepare the consolidated financial statements.
Key Takeaways of the Financial Accounting Net Income or Loss
• There is no reduction in the financial accounting income or loss figure for any minority interest in the constituent entity held by other entities (this is instead taken into account when allocating any top-up tax). For more information, see Allocation of Top-Up Tax.
• Because the financial accounting income or loss figure is based on the profit and loss account, any amounts included in the Other Comprehensive Income section of the financial accounts are generally excluded. Other Comprehensive Income generally consists of items that impact the balance sheet but that aren’t reported in the profit and loss account.
This would include things like unrealized gains or losses on derivatives or retirement benefit plans and foreign currency translation adjustments.
• Although Other Comprehensive Income is generally excluded from the financial accounting income figure, revaluation method gains or losses that are included there are included.
• Consolidated financial accounts will have been prepared based on a materiality threshold. This threshold also applies to the Pillar Two GloBE income calculation.
• If the Constituent Entities’ financial accounts are prepared using an accounting standard different from the Ultimate Parent Entity (UPE) that prepares the consolidated accounts, Article 3.1.3 of the OECD Model Rules provides that another accounting standard may be used if:
o the financial accounts of the constituent entity are maintained based on that accounting standard;
o the information contained in the financial accounts is reliable; and
o permanent differences in excess of EUR 1 million arising from the application to transactions of a particular standard that differs from the UPE’s financial standard, conform to the UPEs accounting standard.
On 18 September 2026, Brazil issued IN RFB No. 2,342/2026 to introduce a new framework for the treatment of substance-based tax incentives under its Pillar Two rules.
On 15 September 2026, the Dutch government presented a bill that would introduce four new Pillar Two safe harbours, extend the Transitional Country-by-Country Reporting Safe Harbour and amend the treatment of certain 52- and 53-week accounting periods.
On September 11, 2026, the OECD released a package of guidance and implementation materials that provides for the exclusion of Explicitly Conditional Taxes from Covered Taxes, clarifies the treatment of mismatched fiscal periods under the Qualified Domestic Minimum Top-up Tax Safe Harbour, updates the GloBE Information Return and establishes the detailed framework for full legislative reviews of domestic minimum tax rules.
Uruguay’s presidential decree dated 31 August 2026 replaces the conditional QDMTT payment waiver in Decree No. 325/025 with a compensation mechanism. Article 1 requires in-scope constituent entities allocated QDMTT in Uruguay to comply with its QDMTT obligations and pay the tax; article 7 repeals the earlier decree.
Qatar has published six decisions dealing with currency conversion, simplified reporting, the Transitional CbCR Safe Harbour, non-material constituent entities, designated local entities and registration.
The Slovak Government has approved draft legislation that would make significant changes to Slovakia’s qualified domestic minimum top-up tax regime. The proposals would implement the OECD’s new Substance-Based Tax Incentives Safe Harbour, extend the Transitional CbCR Safe Harbour and introduce rules preserving Pillar Two filing and payment obligations where a Slovak taxpayer ceases to exist without a legal successor.
Cyprus has opened a public consultation on amendments to its Pillar Two legislation intended to address observations from the European Commission and align the domestic rules more closely with OECD guidance. The consultation opened on 30 July 2026 and is scheduled to close on 5 September 2026.
On August 7, 2026, Germany published a regulation that gives domestic legal effect to a jurisdiction-by-jurisdiction list of qualifying Pillar Two jurisdictions.
On August 8, 2026, Mauritius issued its QDMTT regulations to implement its QDMTT.
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