OECD Announces Safe Harbours and Incentive Alignment in Pillar Two Package
Over 145 jurisdictions in the OECD/G20 Inclusive Framework (IF) on BEPS have agreed on a package to coordinate the global minimum tax implementation by introducing measures to simplify compliance and ensure a level playing field, the OECD announced on 5 January 2026.
The notable components of the package include:
- a reduction in compliance burdens for multinational enterprises (MNEs) and tax authorities when calculating and reporting under Pillar Two rules;
- a substance-based tax incentive safe harbour to align the treatment of tax incentives globally;
- the benefit of additional safe harbours for MNE groups headquartered in eligible jurisdictions meeting minimum taxation standards;
- a review mechanism that will monitor the implementation and ensure fairness among IF members; and
- reinforcement of the role of qualified domestic minimum top-up taxes as the primary tool for protecting local tax bases, especially in developing countries.
"Released today, this comprehensive package for a `side by side' arrangement marks a significant political and technical agreement which will set the foundation for stability and certainty in the international tax system," OECD Secretary-General Mathias Cormann said. "It also preserves the gains achieved and protects the ability for all countries, particularly developing ones, to have first taxing rights over income generated in their jurisdictions."
The OECD plans to release additional tools and factsheets on the matter in the coming weeks and host a dedicated webinar on 13 January 2026, as well as provide capacity-building assistance to jurisdictions requiring technical support.
The package is accessible here.
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