The OECD/G20 Inclusive Framework on BEPS announced on January 5, 2026 that its members have reached agreement on a Side-by-Side package addressing the application of the Global Anti-Base Erosion (GloBE) rules to US-headquartered multinational groups. The package is designed to provide stability and certainty in the operation of Pillar Two by recognizing the US tax system as a Qualified Side-by-Side Regime in defined circumstances.
Under the agreement, US-headquartered MNE groups are exempt from the Income Inclusion Rule and the Undertaxed Profits Rule for fiscal years beginning on or after January 1, 2026, where the relevant conditions are satisfied. The package also includes material simplifications and greater alignment of substance-based tax incentives with qualified refundable tax credits. The Administrative Guidance is expected to be incorporated into the Commentary to the GloBE Model Rules in due course.
For multinational groups with US ultimate parents, the Side-by-Side package materially changes the practical effect of Pillar Two on their global effective tax rate computation. For non-US groups, the package does not alter their existing Pillar Two compliance obligations, but the consistent treatment of US-related operations across multiple jurisdictions will be a new feature of the GloBE landscape.