Pushback from the US saw a last-minute change to OECD Pillar Two rules on a global minimum tax rate, creating more complexity with option for simplified GloBE return and opt-in/opt-out for safe harbour, explains Russell Gammon, chief innovation officer at Tax Systems
Businesses entered 2026 facing ongoing uncertainty over the final shape of the Pillar Two regime, following disruption caused by president Trump’s proposed ‘revenge tax’ in 2025. Luckily, that uncertainty eased early in January with the publication of the OECD’s so-called side-by-side agreement that introduces a new safe harbour that placates the US while maintaining the core 15% global minimum tax.
But at 88 pages long, it is a daunting document to navigate – so let’s break down what it means.
The agreement exempts qualifying domestic regimes from adhering to Pillar Two requirements. In order to qualify, they need to prove that domestic legislation is already in place that means that any top-up tax is highly unlikely. The USA is the first jurisdiction to do so, as their federal corporation tax rate is 21% – well above Pillar Two’s minimum tax rate of 15%.
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