Inclusive Framework of the OECD releases three Pillar Two implementation documents

On September 11, 2026, the Inclusive Framework of the Organisation for Economic Co-operation and Development (OECD) released three new Pillar Two documents: new Administrative Guidance, a revised GloBE Information Return (GIR) document, and an outline of the process for the Full Legislative Review of the Pillar Two rules by jurisdictions. The Administrative Guidance addresses two specific technical items. The updated GIR and the Full Legislative Review framework represent structural developments, but neither document imposes immediate practical changes for multinational enterprise (MNE) groups. This alert provides context regarding these documents.

September 2026 Administrative Guidance

The Administrative Guidance addresses two topics.

I. Explicitly conditional taxes

The guidance clarifies that any local tax that applies only to MNEs subject to the Income Inclusion Rule (IIR) or the Undertaxed Profits Rule (UTPR) will not be treated as a Covered Tax. One example is a conditional domestic top-up tax that applies only if the MNE is subject to an IIR or UTPR.

This type of conditional domestic minimum top-up tax (DMTT) would allow a jurisdiction to maintain a low domestic corporate tax rate and impose a domestic top-up tax only if a company would otherwise be required to pay top-up tax under an IIR or UTPR. A narrow exception exists for conditional taxes enacted before November 30, 2024 that applied only to the 2024 fiscal year, such as the conditional Qualified Domestic Minimum Top-Up Tax (QDMTT) implemented by Barbados.

For United States MNEs in the Side-by-Side framework, this guidance has limited application for 2026 and subsequent years because those groups are no longer subject to the IIR and UTPR. The guidance appears primarily focused on non-US MNE groups.

This guidance addresses conditional DMTTs and certain other explicitly conditional taxes. Additional guidance is expected to be released before year-end 2026 regarding other tax features that may be considered discriminatory toward companies subject to the Pillar Two rules and therefore may not be treated as Covered Taxes.

II. QDMTT and mismatched fiscal periods

The guidance clarifies how a jurisdiction may use local financial accounting standards under a QDMTT when a Constituent Entity’s fiscal period does not align with the Ultimate Parent Entity’s fiscal year.

In practice, this issue is relevant primarily where a company has entities with different fiscal year-ends in the same jurisdiction, such as following acquisitions.

Updated GIR

This update revises the GIR package originally released in January 2025 to implement the Side-by-Side package. The updated GIR applies only to 2026 GIR filings and later years.

From a practical standpoint, those filings are not due until mid-2028, so there is no immediate filing deadline pressure. However, the update could be significant for US MNEs because the new templates will allow companies to determine what data they will need to provide under the Side-by-Side framework, as well as what data is no longer required and what data may be shared with other jurisdictions.

For US MNEs, the updated GIR provides a framework for updating GIR compliance processes and systems.

Terms of Reference for the Full Legislative Review

This document outlines the peer review process for determining whether a jurisdiction’s IIR, UTPR, and QDMTT Safe Harbour legislation obtains and retains qualified status.

The process is administered by the OECD Secretariat and Working Party 11, with the Inclusive Framework making final determinations. Both jurisdictions and business stakeholders can provide input through a structured consultation process.

The review itself follows a three-stage process: transitional self-certification, a full legislative review, and ongoing monitoring. Outcomes are categorized as either “inconsistencies to be addressed,” which are accompanied by remediation timelines, or “items to be monitored.” A failure to address identified inconsistencies can result in the loss of qualified status.

Guidance concerning Related Benefits remains forthcoming, and the OECD has indicated that it intends to release that guidance before year-end. Jurisdictions determined to provide benefits related to their GloBE rules that effectively offset Pillar Two taxes may lose their qualified status.

The anticipated Related Benefits guidance forms part of the broader Pillar Two framework and may affect how jurisdictions structure tax incentives going forward.

For more information

Please contact the author for more information on these developments.