[World Tax News] OECD Releases Pillar Two Global Minimum Tax Package

Editorial Team – [2026] 182 taxmann.com 214 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week:

1. OECD publishes Side-by-Side package on Pillar Two Global Minimum Tax

The OECD has announced that members of the BEPS Inclusive Framework have agreed on the core elements of a Side-by-Side (SbS) arrangement under Pillar Two. The arrangement introduces, inter alia, two safe harbours applicable to multinational enterprise (MNE) Groups headquartered in jurisdictions recognised by the Inclusive Framework as having an eligible tax regime.

Under the SbS Safe Harbour, qualifying MNE Groups are exempt from the application of the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) in jurisdictions other than the jurisdiction of the ultimate parent entity (UPE). In contrast, the UPE Safe Harbour provides a narrower exemption, shielding only the UPE jurisdiction from the application of the UTPR.

The SbS Safe Harbour is available exclusively to MNE Groups whose UPE is located in a jurisdiction that satisfies both the eligible domestic tax regime and the eligible worldwide tax regime criteria. These regimes will be considered eligible only where they effectively ensure a minimum level of taxation on both domestic and foreign operations of the MNE Group.
The UPE Safe Harbour applies to jurisdictions that meet only the domestic component of the eligibility criteria. In such cases, the safe harbour applies solely to the domestic profits of MNE Groups headquartered in the qualifying jurisdiction.

Importantly, the SbS arrangement does not affect the operation of Qualified Domestic Minimum Top-up Taxes (QDMTTs), which remain fully applicable.
It may be noted that the SbS arrangement originates from the exemption sought by the United States, which is currently the only jurisdiction recognised as having a qualified SbS regime. The safe harbour is applicable for fiscal years commencing on or after 1 January 2026, as reflected in the OECD’s Central Record for Global Minimum Tax purposes.

International Consensus on the Way Forward for the Global Minimum Tax Framework

The 147 countries and jurisdictions participating in the OECD/G20 Inclusive Framework on BEPS have reached agreement on a comprehensive package that establishes a coordinated path forward for the operation of the global minimum tax in a digitalised and globalised economy.

Following extensive negotiations, the agreed package for the Side-by-Side arrangement represents a significant political and technical milestone. It is intended to enhance stability and certainty in the international tax system, preserve progress achieved under the global minimum tax framework, and safeguard the ability of all jurisdictions particularly developing economies to exercise primary taxing rights over income generated within their territories.
The package comprises five key components:

•  Simplification measures aimed at reducing compliance and administrative burdens for both MNEs and tax authorities in applying the global minimum tax rules.
• Further alignment of tax incentive treatment through the introduction of a targeted substance-based tax incentive safe harbour.
•  New safe harbours for MNE Groups whose UPEs are located in jurisdictions that meet minimum taxation standards.
•  An evidence-based stocktake mechanism to ensure that a level playing field is maintained across all Inclusive Framework members.
• Reinforcement of the principle that QDMTTs remain a cornerstone of the global minimum tax architecture, particularly for protecting domestic tax bases in developing countries.

OECD Secretary-General Mathias Cormann described the agreement as a landmark achievement in international tax cooperation, noting that the package strengthens tax certainty, reduces complexity, and enhances the protection of tax bases. He further emphasised the importance of effective implementation and continued work on future simplification initiatives.
To support implementation, the OECD will release additional tools and fact sheets in the coming weeks and will host a dedicated webinar on 13 January 2026. The organisation will also continue to provide capacity-building assistance to ensure effective and efficient adoption of the rules across jurisdictions.

Source – Press Release

2. Russian Tax Reforms for 2026: Key Changes Introduced Under Federal Law

Russia has enacted a series of tax reform measures applicable from 2026 pursuant to Federal Law No. 425-FZ dated 28 November 2025. The principal amendments are summarised below.

•  The standard VAT rate has been increased from 20% to 22%. The reduced VAT rate of 10% continues to apply to essential goods, including food products, medicines, and children’s items, while the VAT exemption for software remains unchanged.
• The VAT registration threshold for small taxpayers applying the simplified tax regime is being progressively reduced: from RUB 60 million to RUB 20 million in 2026, further to RUB 15 million in 2027, and to RUB 10 million from 2028 onwards.
•  The reduced social security contribution rate applicable to IT companies has been increased from 7.6% to 15% on income up to the maximum contribution base. Income exceeding the base will continue to be subject to the 7.6% rate.
•  The existing restriction limiting the offset of carried-forward tax losses to 50% of taxable income per tax year has been extended until 31 December 2030.
•  A 15% minimum (top-up) tax has been introduced for Russian constituent entities that are members of multinational enterprise (MNE) groups with consolidated annual revenue of at least EUR 750 million. The tax applies where the effective tax rate of the Russian constituent entity falls below 15%.
•  The conditions for controlled foreign company (CFC) exemption applicable to holding companies have been revised to require that the CFC be subject to an income tax rate of at least 15% in its jurisdiction of residence.
•  Transfer pricing rules have been amended to classify transactions with residents of jurisdictions imposing an income tax rate of 15% or lower as controlled transactions.
•  The special regime for calculating interest penalties has been extended through 2026. Under this regime:

○ for payment delays of up to 30 calendar days, interest is calculated at 1/300 of the key rate per day;
○ for delays exceeding 30 days, interest accrues at 1/150 of the key rate from the 31st to the 90th day; and
○ from the 91st day onwards, the rate reverts to 1/300 of the key rate per day.

These measures generally entered into force on 1 January 2026.

In addition, a new technological levy will be introduced for importers and manufacturers of electronic components and electronic products. The levy is scheduled to apply from 1 September 2026, with the applicable rates and the list of covered goods to be determined by the government.

Source – Federal Law No. 425-FZ

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