OECD Publishes 'Side-by-Side' Package On Pillar Two

On 5 January 2026, the OECD published the Side-by-Side (SbS) package (Package) complementing the Global Anti-Base Erosion Model Rules (GloBE Rules). The Package introduces an SbS system implementing the G7 agreement with the United States (U.S.) of 28 June 2025.

• A permanent Simplified ETR Safe Harbour as of 2027 (with the possibility for jurisdictions to apply it as of 2026 under certain conditions);
• The extension of the Transitional CbCR Safe Harbour by one year;
• A safe harbour for a new category of substance-based tax incentives for GloBE purposes as of 1 January 2026; and
• The introduction of the SbS system via safe harbours as of 1 January 2026. The SbS system can exempt the entire group from the IIR and UTPR (SbS Safe Harbour) or only exempt the income of the Ultimate Parent Entity (UPE) jurisdiction (UPE Safe Harbour). The U.S. is already considered an eligible jurisdiction for the SbS Safe Harbour by the Inclusive Framework (IF) but