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) that deems the top-up tax for a jurisdiction to be zero insofar as it relates to ‘Qualified Tax Incentives’ (QTIs).
The Top-up Tax that relates to QTIs is the difference between:
(i) the Top-up Tax for the jurisdiction calculated with the amount of QTIs used in the year being added to covered taxes (subject to a cap), and
(ii) the Top-up Tax if the SBTI Safe Harbour election hadn’t been made.
A QTI is defined as a generally available tax incentive calculated based on expenditure incurred, or on the amount of tangible property produced in the jurisdiction.
The SBTI Safe Harbour is to apply from fiscal years beginning from January 1, 2026.
Aside from the main election for the SBTI Safe Harbour to apply, the detailed rules for this contain two additional elections.
Tax Credits Election (Art 4)
An MNE group can make an annual election to treat a Qualified Refundable Tax Credit or a Marketable Transferable Tax Credit as a QTI.
Substance Cap Election (Art 4)
The substance cap referred to above for determining the amount added to covered taxes is generally 5.5% of the higher of (1) Eligible Payroll Costs in the jurisdiction or (2) the depreciation and depletion recorded in FANIL for Eligible Tangible Assets located in the jurisdiction.
However, an MNE group can make a 5 year election for the jurisdiction for the substance cap to be 1% of the carrying value of Eligible Tangible Assets located in the jurisdiction (excluding land and other non-depreciable assets) for that Fiscal Year
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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