1. Introduction

On 11 September 2026 the OECD released the 2026 GloBE Information Return (GIR), new Administrative Guidance (AG) on Explicitly Conditional Taxes and on the use of the Local Financial Accounting Standard (LFAS) under a Qualified Domestic Minimum Tax (QDMTT) where fiscal periods mismatch, and the Terms of Reference and Assessment Methodology for the full legislative review of Pillar Two legislation.

The revised GIR updates the return around the Side-by-Side (SbS) package released on 5 January 2026: it adds elections and eligibility data for the new safe harbours, switches off the data points that become irrelevant where a particular safe harbour applies, and includes new reporting obligations onto tax incentives and government benefits.

The new AG excludes Explicitly Conditional Taxes from Covered Taxes and confirms that an Explicitly Conditional DMTT is not a QDMTT, subject to limited transitional exceptions. Further guidance on other discriminatory tax features or benefits is expected by 31 December 2026. The rule applies by reference to exposure to the Income Inclusion Rule (IIR) or Undertaxed Profits Rule (UTPR). The AG also clarifies the relevant accounting standard and accounting periods should be adopted pursuant to a QDMTT where a Constituent Entity's accounts, the Consolidated Financial Statements (CFS) and the UPE's Fiscal Year do not align.

Finally, the Terms of Reference and Assessment Methodology establish the framework for moving from transitional self-certification to a full legislative review of implementing jurisdictions' Pillar Two legislation.

2. The 2026 GloBE Information Return

2.1 Why a GIR 2.0

The current GIR was published in January 2025. A new 2026 revision is driven by the following:

1. the SbS package: the return has to accommodate elections for the four new safe harbours, collect the data demonstrating eligibility, and switch off the data points that become redundant where a safe harbour applies;
2. the reporting of benefits: following the January 2025 AG on Article 9.1, and with broader guidance on benefits still under discussion, visibility over government benefits related to the GloBE Rules or a QDMTT is needed, so that distortive benefits can be identified and, where required, neutralised;
3. operational housekeeping: two years of implementation experience and the parallel work on the XML Schema surfaced points needing clarification, from taxpayer identification to the reporting of five-year elections.

2.2 The new safe harbour elections

The Substance-based Tax Incentive (SBTI) Safe Harbour applies for Fiscal Years commencing on or after 1 January 2026. The Simplified ETR Safe Harbour must be available for Fiscal Years commencing on or after 31 December 2026, with limited earlier application for Fiscal Years commencing on or after 31 December 2025 where the specified conditions are met. The election for the SbS Safe Harbour is made in the general section, within the table that collects information on the UPE (table 1.3.1), because eligibility turns on the UPE being located in a jurisdiction listed in the Central Record as having a Qualified SbS Regime for the Reporting Fiscal Year. The explanatory guidance also discusses additions of two new options in the table – Qualified SbS Regime and Qualified UPE Regime. The jurisdictional safe harbour election menu (table 2.2.1) is expanded to include the Simplified ETR Safe Harbour, the SBTI Safe Harbour and the UPE Safe Harbour. The explanatory guidance also confirms the sunset of the Transitional UTPR Safe Harbour, which remains available only for Fiscal Years of no more than 12 months beginning on or before December 31, 2025 and ending on or before January 3, 2027.

2.3 The SbS Safe Harbour: a lighter, QDMTT-centred return

Electing the SbS Safe Harbour does not remove the obligation to file. Groups are still required to disclose details on the group structure, with core identification and ownership data for all Constituent Entities, JVs and JV subsidiaries.

Upon election of SbS Safe Harbour, the data points serving the IIR and UTPR are switched off, and the GloBE status of entities (including stateless entities) is reported only for the jurisdictions having QDMTT in force for the reporting fiscal year. For the tax-transparent or hybrid character of flow-through entities, reporting is done for QDMTT jurisdictions in which owners are located. Excluded Entities, structural changes, and Sections 2 and 3 are similarly limited to QDMTT jurisdictions. For these groups the GIR effectively becomes a QDMTT return in corporate-structure packaging.

2.4 The Simplified ETR Safe Harbour

Where this safe harbour is elected, a new eligibility table requires the key building blocks of the simplified computation. These comprise jurisdictional profit or loss before income tax together with a prescribed set of adjustments resulting in Simplified Income or Loss; the jurisdictional income tax expense together with relevant adjustments resulting in Simplified Taxes; and the resulting Simplified ETR. A dedicated elections table captures the annual and five-year elections specific to the safe harbour, while the guidance confirms which standard GloBE elections are unavailable. Where the fair value election under Article 6.3.4 is applied to a past M&A transaction, the return now tracks the Election Year, so administrations can follow the five-year inclusion period without cross-checking earlier returns.

2.5 The SBTI Safe Harbour and increased transparency on incentives

The SBTI Safe Harbour permits a group to increase its Adjusted Covered Taxes by the amount of Qualified Tax Incentives (QTIs) utilised during the relevant year, subject to the applicable Substance Cap. The GIR captures the relevant components separately, including Qualified Refundable Tax Credits (QRTCs) and Marketable Transferable Tax Credits treated as QTIs, as well as the aggregate amount of other QTIs. New rows within the GloBE Income and Adjusted Covered Taxes computations are also introduced to ensure that the relevant amounts are appropriately reflected and to prevent double counting. More significant is the requirement for an incentive-by-incentive breakdown, subject to specified materiality thresholds. No such breakdown is required where QTIs are less than 25% of Adjusted Covered Taxes, while individual incentives must be separately itemised where they exceed either 10% of total QTIs or EUR 1 million. In addition, a new column in Table 1.4 reports the QTIs utilised where the safe harbour applies, categorised into specified bands ranging from below EUR 1 million to EUR 250 million or more.

2.6 Reporting benefits received and QDMTT legal challenges

A new set of benefits data points responds to the structural integrity concern that a jurisdiction could collect the minimum tax with one hand and return its economic value with the other. A new column in the high-level summary requires the range of benefits received in each jurisdiction, using the same bands as Top-up Tax payable, and a further column a Yes/No indication of whether they were fully neutralised in the QDMTT jurisdiction. Benefits treated as a refund or credit of Covered Tax under Article 4.1.3(c) become a negative adjustment to Adjusted Covered Taxes, and in the QDMTT section benefits from the general government of the QDMTT jurisdiction reduce QDMTT payable, again with a neutralisation data point. A further data point requires disclosure of QDMTT amounts the group has challenged, or that the authority has determined not to be assessable or collectible, for instance under a stabilisation or investment agreement.

2.7 Key takeaways – enhanced data and visibility requirements

The revised GIR significantly expands the range of information that groups must collect, validate and retain. Many of the new data points, including QTIs, benefits received from governments, QDMTT disputes, QDMTT Safe Harbour information and additional safe harbour eligibility data, may not sit within existing Pillar Two compliance engines. As a result, tax teams may need to obtain information from a broader group of stakeholders, including finance, incentive-management, legal, controversy and government-relations functions. For many groups, the challenge will be data governance and sourcing rather than the technical computation itself.

The revisions also indicate a broader policy objective. Through the expanded reporting of QTIs, government benefits and related QDMTT adjustments, the Inclusive Framework is increasing visibility over arrangements that may offset or neutralise Pillar Two liabilities. Groups should therefore expect greater scrutiny of incentive arrangements that are economically linked to Pillar Two outcomes, particularly as peer review and monitoring processes continue to develop.

The GIR introduction section is also updated to reflect that the Inclusive Framework may collect aggregated, anonymized GIR and QDMTT data (including data on QTIs, QRTCs and marketable and non-marketable transferable tax credits) for peer review and monitoring purposes. In short, enhanced data collection is no longer just a compliance requirement, but a key input into peer review, monitoring and future scrutiny of Pillar Two outcomes.

2.8 Clarifications

The revised GIR also includes some amendments and clarifications in relation to:

• Unique identifiers issued by a Government Verification Service are accepted as an alternative to TINs throughout the GIR;
• Which TIN to report for subgroups (minority-owned subgroups, JV groups, investment entities);
• For five-year elections, the Election Year must be reported in the GIR of every year the election remains in force, so that a jurisdiction that later acquires taxing rights can see when the election was made;
• TINs of Constituent Entity-owners are added for investment entity tax transparency and taxable distribution method elections; and
• The aggregate reporting simplification for tax consolidated groups is extended to regimes that consolidate the full amount of profits and losses of entities that are not wholly owned

2.9 When it applies

The amendments apply to Reporting Fiscal Years commencing on or after 31 December 2025, with an updated XML Schema to follow. For calendar-year groups, the revised GIR will therefore first apply to Fiscal Year 2026, with the related filings and exchanges generally taking place in 2028. The January 2025 GIR continues to apply to Reporting Fiscal Years commencing before 31 December 2025, meaning that the two versions will operate in parallel for a period.

The revised GIR does, however, contain Explanatory Guidance notes unrelated to the SbS package that clarify how existing data points are to be completed, and those must be followed in any GIR, including returns for earlier Fiscal Years.

2.10 Why it matters for MNEs

For US-headquartered groups electing the SbS Safe Harbour, the election remains a GIR-based compliance exercise rather than a complete exit from Pillar Two reporting. The group must still file the general section, identify the election(s) made, disclose the corporate structure and complete jurisdictional reporting for QDMTT jurisdictions. The relief is nonetheless substantial: It includes the removal of the reporting requirement under Table 1.4, thereby eliminating the need for jurisdiction-by-jurisdiction disclosure of ETR ranges and top-up tax bands to all Implementing Jurisdictions. It also removes the requirement to perform GloBE computations for jurisdictions that do not impose a QDMTT, as well as the requirement to provide IIR and/or UTPR computations and related corporate-structure information. In practice, the compliance focus shifts to jurisdictions with an operative QDMTT, while Fiscal Years 2024 and 2025 continue to follow the January 2025 template and remain within the existing IIR and UTPR framework.

For all other groups, the full GIR remains the baseline, while the practical burden is now less about applying a single computation and more about managing elections, evidencing safe harbour eligibility and maintaining supporting data. 

First, the availability of safe harbours must be assessed annually on a jurisdiction-by-jurisdiction basis, he QDMTT Safe Harbour, the de minimis exclusion, the transitional safe harbours and, where relevant, the UPE Safe Harbour. While the number of available safe harbours has increased, the overall compliance process would also need additional controls to track the inputs, assumptions and be reconsidered as demonstrating eligibility would require separate computations, supporting documentation and new reporting obligations that differ from standard GloBE calculations.

Second, neither of the new permanent safe harbours is computation-free. The Simplified ETR Safe Harbour requires a separate computation of income and taxes, together with the associated elections and governance requirements, while the SBTI Safe Harbour requires jurisdiction-level reporting of eligible payroll costs, depreciation and depletion of eligible tangible assets, and the amounts of QTIs utilised on an incentive-by-incentive basis.

The broader point is that the revised GIR increases transparency over items that may affect Pillar Two outcomes, even where those items are not part of the core ETR computation. Groups should therefore embed incentive, benefits and QDMTT data into their controls framework early, as these data points are likely to inform both tax authority review and Inclusive Framework monitoring.

3. The new Administrative Guidance

3.1 Explicitly Conditional Taxes: the rationale

The guidance delivers on a commitment which dates back from the introduction to the SbS package, the conditional or discriminatory taxes will not be treated as Covered Taxes. This measure is consequential to the SbS Safe Harbour and the possibility of MNE groups to elect out of the IIR and the UTPR application. Therefore, a jurisdiction could be tempted to enact a tax reaching only local members of groups that remain exposed to those charging rules, while sparing MNE Groups carved-out from the IIR/UTPR.

3.2 The rule and the consequence

The new Commentary to Article 4.2 clarifies that a Covered Tax does not include an Explicitly Conditional Tax. The AG provides that a tax is considered explicitly conditional where its application is expressly linked to the imposition of a Qualified IIR or Qualified UTPR in another jurisdiction and the relevant Constituent Entity (or Joint Venture or member of a JV Group) is not eligible for the SbS Safe Harbour. This may arise either on an inclusive basis, where the tax applies only if the relevant Qualified IIR or Qualified UTPR applies in another jurisdiction and the entity is not eligible for the SbS Safe Harbour; or on an exclusive basis, where the tax is disapplied where either of these same conditions are met. A tax is not considered an Explicitly Conditional Tax merely because it applies only to MNE Groups exceeding a specified consolidated revenue threshold. Note that a DMTT, an IIR or a UTPR which is an Explicitly Conditional Tax is also not a Covered Tax. Several levies such as surcharge will be treated as separate tax and will not be treated as Covered Tax.

An Explicitly Conditional Tax is generally not a Covered Tax and, therefore, cannot qualify as a QDMTT. A limited transitional exception applies to certain conditional DMTTs introduced from 1 January 2024, provided they were enacted before 30 November 2024 and become unconditional for Fiscal Years beginning on or after 1 January 2025.

A similar transitional rule applies to Covered Taxes generally, under which an Explicitly Conditional Tax may continue to be treated as a Covered Tax for Fiscal Years beginning before 1 January 2025, subject to the same enactment and transition conditions. An IIR or UTPR that is explicitly conditional is likewise not a Covered Tax and would not qualify as a Qualified IIR or Qualified UTPR.

In other words, an Explicitly Conditional Tax is excluded from Adjusted Covered Taxes; it does not form part of the Net Taxes Expense adjustment under Article 3.2.1(a) and is not added back to Financial Accounting Net Income or Loss in computing GloBE Income. The tax is therefore paid locally but does not contribute to the Pillar Two ETR calculation, so it does not reduce the top-up tax that remains due elsewhere.

3.3 QDMTT fiscal-period mismatches: the accounting standard clarification

GloBE Income or Loss and Adjusted Covered Taxes are generally computed on the accounts used to prepare the CFS, and where a Constituent Entity's own fiscal period differs from the CFS Fiscal Year, paragraphs 13.2 to 13.8 of the Commentary to Article 1.1.1 already direct the computation to the period used for that entity in the CFS. The Accounting Standard in the QDMTT Safe Harbour, however, required the UPE's Financial Accounting Standard wherever the Fiscal Year of the entity's accounts differed from that of the CFS, language open to a stricter reading that would have forced entities onto the consolidated standard merely because their period does not align with the UPE's Fiscal Year. The guidance confirms that the CFS accounting standard is not required where the fiscal period of the entity's accounts is the same as the period used for it in preparing the CFS, regardless of whether that period aligns with the UPE's Fiscal Year. Note that a jurisdiction is not required to strictly apply this clarification to fiscal periods beginning before the date the guidance was approved by the Inclusive Framework

3.4 The LFAS Rule and the Required QDMTT Fiscal Period

Where the fiscal period of a Constituent Entity's local accounts differs from the period used for it in the CFS, a QDMTT jurisdiction that has adopted the LFAS Rule must generally require the UPE's Financial Accounting Standard. That does not apply where the mismatch arises because the entity became, or ceased to be, a Constituent Entity during that period or the immediately preceding one as a result of an acquisition, disposition, dissolution, merger or similar restructuring, including the establishment of a Permanent Establishment. Such jurisdictions may in addition require the UPE's standard where the local fiscal period differs from the UPE's Fiscal Year. Separately, a QDMTT jurisdiction may require Constituent Entities to compute the QDMTT for a fiscal period set by its own legislation (a Required QDMTT Fiscal Period), which may or may not match the UPE's Fiscal Year; where it does so and the LFAS conditions are met, the QDMTT must be computed under the LFAS, and an entity keeping its accounts for a different period applies the principles of the LFAS together with those of paragraphs 13.2 to 13.8, on LFAS rather than CFS terms.

3.5 The Safe Harbour across misaligned periods

When the Required QDMTT Fiscal Period doesn't match the UPE's Fiscal Year, the Safe Harbour zeroes out the Jurisdictional Top-up Tax for a UPE Fiscal Year only if every Required QDMTT Fiscal Period beginning or ending in that year qualifies for it. If even one fails, including due to the Switch-off Rule, the Safe Harbour is lost for the whole UPE Fiscal Year, and the Jurisdictional Top-up Tax is reduced by the QDMTT payable instead. A 2024 relief softens this: the Top-up Tax is deemed zero for a UPE Fiscal Year beginning in 2024 (or on 31 December 2023) if the Safe Harbour applies to any Required QDMTT Fiscal Period starting that year, even if the QDMTT wasn't in force for the earlier months.

Where the Safe Harbour does not apply, the Domestic Top-up Tax of each Required QDMTT Fiscal Period is allocated to each month of that period by reference to the income arising in those months or, if that is not reasonably practicable, pro rata tempore. The sum allocated to months ending within the UPE's Fiscal Year is the QDMTT payable credited for that year. The same rules apply to Joint Ventures and JV Subsidiaries. The following example in the guidance illustrates this:

3.6 When it applies

This guidance will be incorporated into the Commentary. It sets no separate effective date for the Explicitly Conditional Tax rule, so implementation into domestic law follows the general requirements for Administrative Guidance to be implemented in domestic law following Article 8.3.1, subject to the two transition rules mentioned above.

For the fiscal-period mismatch guidance, the main point is timing rather than retroactivity. The guidance confirms how the LFAS Rule, Required QDMTT Fiscal Period and QDMTT Safe Harbour should operate where local QDMTT periods do not align with the UPE Fiscal Year, but jurisdictions are not required to apply the accounting-standard clarification to fiscal periods beginning before the guidance is approved by the Inclusive Framework. The 2024 relief is therefore important as a transitional mechanism: for a UPE Fiscal Year beginning in 2024, or on 31 December 2023, the jurisdictional Top-up Tax may still be treated as zero where the QDMTT Safe Harbour applies to a Required QDMTT Fiscal Period beginning during that year, even if the QDMTT did not apply for the earlier months. This should be understood as a time-limited bridge for first-year implementation, rather than a general relaxation of the all-or-nothing safe harbour rule for misaligned QDMTT periods.

3.7 Why it matters for MNEs

The conditionality rule is primarily protective and it deters the enactment of levies targeted at groups that remain within the IIR and UTPR, and gives groups a clear basis for testing local surcharges whose application turns on their GloBE posture. Where such a tax exists the consequences are severe, because it drops out of Adjusted Covered Taxes entirely and a conditional DMTT loses QDMTT and QDMTT Safe Harbour status outside the narrow 2024 derogation.

The fiscal-period guidance cuts the other way, removing a real compliance risk: local-standard accounts remain usable where the entity's period matches the period used for it in the CFS. But it also introduces a cliff, since with misaligned periods the QDMTT Safe Harbour is all-or-nothing for the UPE Fiscal Year, and a Switch-off Rule applying to a single straddling period pulls the jurisdiction back into full GloBE computations and monthly allocation mechanics.

4. The Terms of Reference for the full legislative review

The third release is different in character: it is less about Pillar Two reporting and more about how the Inclusive Framework will police the qualified status of DMTTs.

4.1 What the review requires and how it works

Qualified status is at the centre of the Pillar Two framework as the rule order may switch off the rules in one jurisdiction by reference to qualified rules in another, in accordance with the central record of legislation. Until now it has rested on the transitional qualification mechanism, a self-certification based on a high-level review of the legislation’s main features. The full legislative review replaces that with a detailed, text-based analysis, backed by recommendations, monitoring and, ultimately, the possibility of losing qualified status. The terms of reference are broken down by type of legislation:

1. IIR and UTPR: the legislation must produce outcomes consistent with the GloBE Model Rules, Commentary and Administrative Guidance, meaning systematically equivalent Top-up Tax liabilities; the test is outcome-based, so different drafting is acceptable. The review also covers GIR filing under Articles 8.1 and 9.4, and whether the jurisdiction demands no more information than the standardised GIR and respects the central record;
2. DMTT: the legislation must incorporate the mandatory variations in the QDMTT Commentary and produce functionally equivalent outcomes, without systematically yielding less Top-up Tax than the GloBE Rules;
3. QDMTT Safe Harbour: the legislation must also meet the Accounting Standard and the Consistency Standard of the QDMTT Safe Harbour Commentary, with only listed acceptable variations permitted; a higher standard of consistency applies, since the safe harbour operates as an exemption;
4. Related Benefits: a qualified rule cannot coexist with benefits related to the rules, which will be handled through a dedicated ongoing monitoring process rather than the full legislative review, a process the new GIR benefits data points are well placed to feed.

Procedurally, the review is initiated by the implementing jurisdiction, which must submit the relevant legislation together with a comparison table, self-assessment form and translation. The Secretariat gathers peer and stakeholder input, including taxpayer feedback through a standardised questionnaire, and prepares a preliminary assessment that identifies inconsistencies, proposed recommendations and items to be monitored. The assessment will be approved on a consensus-minus-one basis, first in Working Party 11 and then at Inclusive Framework level, with timed escalation procedures to avoid open-ended deadlock.

Where a significant inconsistency cannot be addressed through recommendations, qualified status can be withdrawn with immediate effect. The loss of status applies prospectively only and is recorded, together with the relevant recommendations, in the publicly available Central Record - the same record now used for GIR purposes in determining SbS and UPE Safe Harbour eligibility. Conversely, where a jurisdiction retrospectively rectifies an inconsistency, its qualified status may also be recognised retrospectively.

One theme running across all the releases is the growing importance of the central record. Eligibility for certain safe harbours, the determination of qualified status and the operation of the Pillar Two rule order increasingly depend on outcomes reflected in the central record rather than solely on domestic legislation. As a result, monitoring central record developments is becoming an ongoing governance exercise for in-scope MNE Groups rather than a year-end compliance check.

4.2 When it applies

The review will be initiated by the implementing jurisdiction, generally within two years of the legislation's effective date, or three years where it took effect on or before 1 April 2025; UTPR reviews will not be initiated before 1 January 2028. Missing the deadline costs transitional qualified status six months later, absent an extension granted on a consensus-minus-one basis. The peer review process itself will be reviewed, but not before 31 December 2030.

4.3 Why it matters for MNEs

While the peer review is a government-to-government exercise, and is unlikely to have immediate impact on groups, it may affect the qualified status of the rules which forms the foundation of the manner in which Pillar Two should be scoped and applied for a group. Groups also gain a formal voice, since the stakeholder questionnaire invites taxpayers to flag the inconsistencies, they must comply with.

5. Conclusions: What MNEs should do?

The three releases land while Fiscal Year 2026 is already under way, so in-scope groups should translate the new rules into practical compliance workstreams covering safe harbour elections, data readiness, jurisdictional risk screening and central-record monitoring without further delay. Overall, in-scope groups should:

1. Map the safe harbour landscape jurisdiction by jurisdiction for Fiscal Year 2026, modelling the interaction between the QDMTT Safe Harbour, the SBTI Safe Harbour and the Simplified ETR Safe Harbour, and, where relevant, the SbS and UPE Safe Harbours that depend on a central-record recognition;
2. Gap-assess data readiness against the new GIR, covering the simplified ETR computation, the Substance Cap components, the incentive-by-incentive QTI itemisation and the benefits amounts, as early planning will help identify data owners, source systems and evidentiary gaps before they become late-stage filing issues.
3. Screen the jurisdictional footprint for conditionality, looking for taxes, surcharges or exemptions whose application, or disapplication, turns on the group's GloBE posture; exclusionary drafting, including exemptions reserved for non-GloBE taxpayers, is equally caught. Where such a tax exists, re-run ETR and QDMTT modelling and check the 2024 grandfathering conditions, which depend on enactment before 30 November 2024 and on the conditionality ending from 1 January 2025;
4. Map the fiscal-period mismatches, identifying Constituent Entities and JV Subsidiaries whose local accounts follow a different year-end from the CFS and jurisdictions whose legislation prescribes a Required QDMTT Fiscal Period, and make sure systems can track QDMTT amounts monthly across two straddling periods where the Safe Harbour is lost;
5. Refresh the Pillar Two compliance calendar for two GIR templates, with Fiscal Years 2024 and 2025 on the January 2025 version and Fiscal Year 2026 on the 2026 version, due in 2028, each with its own Schema, and tighten election-tracking to prepare for annual reporting of the Election Years for long-term elections;
6. Build the Central Record tracking into the governance cycle, checking it periodically and modelling how any loss of QDMTT, QDMTT Safe Harbour or IIR status in a key jurisdiction would affect the group’s rule-order analysis for Fiscal Years starting after a decision date;
7. For US groups, confirm the SbS election pathway and refocus data collection on the QDMTT footprint from Fiscal Year 2026 and beyond;
8. Engage before year-end on the guidance still to come, both the discriminatory-features instalment due by 31 December 2026 and the open GIR points, including whether the QTI breakdown applies where the QDMTT Safe Harbour is elected.