1. Who this guide is for
This guide is for multinational groups whose ultimate parent entity is a US corporation or other US entity, and for the accounting firms that advise them.
It focuses on how the group’s overseas operations are affected. US domestic tax rules are covered only where they interact with Pillar Two.
2. Why parent location matters
The United States has not enacted the OECD Income Inclusion Rule, the Undertaxed Profits Rule or a qualified domestic minimum top-up tax. It applies its own regimes instead, including the corporate alternative minimum tax and the regime taxing the income of controlled foreign corporations, previously known as GILTI.
The OECD Inclusive Framework agreed the Side-by-Side package in January 2026 following the June 2025 G7 statement. An eligible group whose ultimate parent entity is located in a jurisdiction with a recognised Qualified SbS Regime, including the United States, may elect the Side-by-Side safe harbour for fiscal years commencing on or after 1 January 2026 or a later date in the Central Record, subject to domestic implementation. QDMTTs are unaffected.
The arrangement does not remove domestic minimum top-up taxes. A US-headed group may still pay top-up tax in the jurisdictions where its subsidiaries operate, and may still have registration and reporting obligations there. The scope, conditions and effective periods of the arrangement need to be confirmed for each group.
3. Questions about overseas operations
- Which jurisdictions where the group operates apply a domestic minimum top-up tax, and from which financial period?
- What is the effective tax rate in each of those jurisdictions once local incentives and credits are taken into account?
- Does the group meet the conditions for side-by-side relief for each relevant period, and what must be filed to claim it?
- Are there intermediate holding companies in jurisdictions that apply an Income Inclusion Rule, and how does the side-by-side arrangement affect them?
- Are any subsidiaries partly owned, or are there joint ventures, that need separate treatment?
- Which local registrations, notifications or returns apply even where no top-up tax is payable?
4. Local implementation information by rule and financial period
| Rule | Status | Applicable period | Source |
|---|---|---|---|
| QDMTTQualified Domestic Minimum Top-up Tax | Not enacted | Not applicable | Not applicable |
| IIRIncome Inclusion Rule | Not enacted | Not applicable | Not applicable |
| UTPRUndertaxed Profits Rule | Not enacted | Not applicable | Not applicable |
These rows describe US federal law, so a rule that is not enacted has no commencement date. The rules that affect a US-headed group most are usually those of the other jurisdictions where it operates. Side-by-Side relief concerns how those other jurisdictions treat US-parented groups; it is not US domestic implementation and does not create a US commencement date.
5. Potential reliefs requiring assessment
- An eligible group may elect the Side-by-Side safe harbour for fiscal years beginning on or after 1 January 2026 or a later date in the OECD Central Record, subject to domestic implementation. It relieves IIR and UTPR, but not QDMTTs.
- The transitional CbCR safe harbour in jurisdictions where the group’s country-by-country report data meets the tests.
- Safe harbours for qualified domestic minimum top-up taxes in the jurisdictions that apply them.
- The 2026 package also includes the Simplified ETR safe harbour and the Substance-based Tax Incentive safe harbour. Eligibility, elections, effective dates and domestic implementation require separate assessment.
- The OECD extension is not, by itself, proof of domestic adoption. IRAS has announced implementation; Swiss guidance confirms direct applicability; Australian rules enact the extension; and Japan’s 2026 reform explanation confirms a one-year extension. Adoption in another jurisdiction must be established from its own rules or official guidance.
6. Reporting considerations
Side-by-side relief does not, by itself, remove reporting obligations. Overseas jurisdictions may still require registration for their domestic minimum top-up tax, local top-up tax returns, notifications identifying the filing entity, or a GloBE Information Return.
The September 2026 GIR update incorporates Side-by-Side simplifications for fiscal years commencing on or after 31 December 2025. The sections required depend on the applicable safe harbour and jurisdiction; QDMTT reporting can remain necessary.
7. Information to prepare
- Legal entity chart showing ownership percentages and the jurisdiction of each entity
- Consolidated revenue for the four financial years before each period under review
- Country-by-country report data by jurisdiction
- Financial statements and tax expense, including deferred tax, for each jurisdiction
- Eligible payroll costs and tangible assets by jurisdiction
- Registration and filing status for each overseas jurisdiction
8. Official sources
- GloBE Model Rules (December 2021)OECD
- Consolidated Commentary to the GloBE Model Rules (2026)OECD
- Side-by-Side package, including the extended transitional CbCR safe harbour (January 2026)OECD Inclusive Framework on BEPS
- Package on consistency and certainty, including GIR updates (September 2026)OECD Inclusive Framework on BEPS
- Central record of legislation with transitional qualified statusOECD
- Singapore implementation of the Side-by-Side packageInland Revenue Authority of Singapore
- Swiss practice guidance on the extended CbCR safe harbourSwiss Federal Tax Administration
- Japan 2026 tax reform explanation: CbCR safe harbour extensionJapan Ministry of Finance
- Australian 2026 amendments to the CbCR safe harbourAustralian Federal Register of Legislation
- Corporate alternative minimum tax guidanceInternal Revenue Service
- Corporate alternative minimum tax: Form 4626 instructions (2025)Internal Revenue Service
These links lead to official legislation, guidance or subject-specific resources. The official texts govern.
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