United States on CompPress | Transfer Pricing Resources

OECD Inclusive Framework Agrees Side-by-Side Package on Pillar Two

Mon, 05 Jan 2026 00:00:00 +0000

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.

GILTI Renamed to NCTI Under One Big Beautiful Bill Act; Effective Rate Reset for 2026

Mon, 15 Dec 2025 00:00:00 +0000

The One Big Beautiful Bill Act of 2025 (OBBBA), enacted in July 2025, renames the Global Intangible Low-Taxed Income (GILTI) regime as Net CFC Tested Income (NCTI) and modifies the operative parameters of the regime for tax years beginning after December 31, 2025. The rename is more than cosmetic: the OBBBA also resets the Section 250 deduction percentage and the effective US tax rate on the inclusion.

For NCTI inclusions in tax years beginning after December 31, 2025, the Section 250 deduction is set at 40%. Combined with the headline 21% US corporate tax rate, this produces an effective US tax rate of approximately 12.6% on NCTI inclusions, before consideration of the foreign tax credit and the post-OBBBA expense allocation rules. The 90% foreign tax credit rate (i.e., the 10% haircut) on NCTI-related foreign taxes continues to apply, as do the rules requiring the allocation of a portion of US-incurred expenses against the NCTI basket.