Business at OECD Commends the OECD/G20 Inclusive Framework's Global Minimum Tax Side-by-Side Package

Crucial 'Side-by-Side' Agreement, Safe Harbours, and Clarity on Incentives Enhance Business Certainty

Business at OECD (BIAC) commends the OECD/G20 Inclusive Framework for approving a pivotal package of comprehensive guidance that delivers simplifications through much needed safe harbours, alignment of substance-based tax incentives with qualified refundable tax credits and a "side-by-side" system for the Global Minimum Tax (Pillar Two). This resolution delivers vital clarity and stability for multinationals globally.

Central to the announcement is the acknowledgement of complementary tax regimes, such as the existing US minimum tax rules. This is an achievement that preserves the integrity of international tax cooperation, reduces the risk of complex double taxation, and averts potential retaliatory tax measures that would have severely prejudiced global trade and investment.

Securing Critical Safe Harbours and Simplification Measures

Business at OECD particularly welcomes the Inclusive Framework’s constructive response to the business community's calls for administrative relief, which includes the extension of the Transitional Country-by-Country Reporting (CbCR) Safe Harbour and the introduction of a UPE Safe Harbour (replacing the Transitional Undertaxed Profits Rules (UTPR) Safe Harbour). These safe harbours provide MNEs with essential time and stability to build and test the highly complex systems required for full GloBE Rule compliance, significantly easing the initial compliance burden.

Business at OECD also applauds the positive outcome achieved on the permanent simplified Effective Tax Rate (ETR) safe harbour, which will reduce compliance burdens for businesses. The adoption of a 15% safe harbour rate and a gateway approach with limited adjustments to simplified income, the ability of to elect the application of the safe harbour year-on-year (thus, not applying a “once out always out rule”) and the inclusion of optional elections and flexibility represent meaningful progress toward simplification. While more work is needed to deliver further clarity and ease of implementation, the permanent ETR safe harbour and other key simplification measures reflected in the release represent an important step forward, reflecting constructive engagement between the OECD, the Inclusive Framework, and the business community.

Business at OECD further appreciates the consideration provided by the Inclusive Framework on the treatment of substance-based tax incentives.  This certainty is paramount to ensuring that legitimate, economically sound incentives—aimed at fostering innovation, growth, and cross-border investment—are not nullified or unfairly penalized under the GloBE framework. We are working closely with our members to understand the impact of these provisions.

The Path Forward: Focus on Administrability

Christian Kaeser, Business at OECD's Tax Committee Co-Chair noted that "The approval of this package marks a significant turning point, translating technical alignment into actual tax policy certainty for businesses navigating this significantly complex set of rules. The alignment with the US, coupled with the critical extensions and resolution on incentives, demonstrates the global spirit in tax and manifests the OECD/G20 Inclusive Framework's significance in this regard."

As MNEs move toward full adoption, Business at OECD urges the OECD/G20 Inclusive Framework to maintain its focus on the administrability and simplification of the Pillar Two rules. Business at OECD remains committed to collaborating with the OECD and the G20 to ensure the remaining work programme and final implementation phase is as efficient and coordinated as possible. "We appreciate the OECD and Inclusive Framework's commitment to considering input from business on the practical compliance challenges under the Global Minimum Tax rules and applaud the commitment to develop further simplifications that will benefit tax administrations and taxpayers alike.", says Daniel Smith, Business at OECD's Tax Committee Co-Chair. The OECD and the OECD/G20 Inclusive Framework continue to play an essential role as the forum for multilateral cooperation on international tax.

For further information, please contact:

Business at OECD

Max Jablonowski, Communications Manager (jablonowski@biac.org)

About Business at OECD

Established in 1962, Business at OECD (BIAC) stands for policies that enable businesses of all sizes to contribute to growth, economic development, and societal prosperity. Through Business at OECD, national businesses and employers’ federations representing over 10 million companies provide and receive expertise via our participation with the OECD and governments promoting competitive economies and better business.