This is a new Safe Harbour included in the January 2026 OECD 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).
Side-by-Side (SbS) Safe Harbour
The SbS Safe Harbour excludes an MNE group from the IIR and UTPR (not QDMTT) where its UPE is located in a qualifying SbS jurisdiction. A qualifying SbS jurisdiction is a jurisdiction that has an eligible domestic tax regime and an eligible worldwide tax regime (generally required to be in place before January 1, 2026) as well as providing a FTC for QDMTTs.
Various conditions are required to be met for a tax system to qualify as an eligible domestic tax system or an eligible worldwide tax regime (eg for an eligible domestic system its statutory nominal CIT rate is at least 20%), however in both cases there must not be a material risk that the GloBE ETR would be below 15%.
Whether a jurisdiction qualifies as a qualifying SbS regime will be determined by the OECD and the jurisdiction will be included in the Central Record (similar to how DMTTs that qualify as QDMTTs etc are). To date only the USA is recognised by the OECD as a qualifying SbS regime.
The SbS Safe Harbour will apply for Fiscal Years from January 1, 2026.
UPE Safe Harbour
The UPE Safe Harbour is similar to the SbS Safe Harbour but only applies to exclude an MNE group from the UTPR on profits located in the UPE jurisdiction. However to qualify a jurisdiction only needs to have an eligible domestic tax regime (not an eligible worldwide tax regime as required for the SbS Safe Harbour).
As with the SbS Safe Harbour, Qualified UPE Regimes will be listed in the OECD Central Record and this Safe Harbour will apply from January 1, 2026.
On January 19, 2026, South Korea issued a Draft Law to amend the Enforcement Decree to the International Tax Adjustment Act. This provides for detailed provisions for the application of the QDMTT and will also extend the Transitional CbCR Safe Harbour by 1 year (as provided in the January 2026 OECD Side-by-Side Package).
On January 19, 2026, the Hong Kong Inland Revenue Department opened its E-filing portal for the submission of Top-Up Tax Notifications
On December 31, 2025, Israel enacted Law No. Law 5776-2025 on the Minimum Corporate Tax for Multinational Groups. The enacted law contains some significant changes from the previous draft law.
On December 29, 2025, Uruguay’s President issued Decree No. 325/025, to provide for exemptions from the QDMTT for entities covered by a tax stability agreement. Note that Law N° 20446 to enact the QDMTT was published in the Official Gazette on January 8, 2026.
On December 23, 2025, Korea enacted Law number 21215 to implement the 2026 Tax Reform. This includes a QDMTT from January 1, 2026.
On January 5, 2026, the OECD Released Guidance on amendments to the Pillar 2 rules for the Side-by-Side Tax Package. This includes a new Simplified ETR Safe Harbour from December 31, 2026 (December 31, 2025 in certain cases). We provide an excel overview and a sample calculator for the key elements of the Safe Harbour calculation.
On January 5, 2026, the OECD Released Guidance on amendments to the Pillar 2 rules for the Side-by-Side Tax Package. This includes a new Substance-based Tax Incentive Safe Harbour. This online tool shows how the new safe harbour operates.
On January 5, 2026, the OECD Released Guidance on amendments to the Pillar 2 rules for the Side-by-Side Tax Package. This article looks at a number of the new elections that arise from this.
On January 5, 2026, the OECD Released Guidance on amendments to the Pillar 2 rules for the Side-by-Side Tax Package.
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