The OECD’s new Pillar Two Side-by-Side (SbS) package is another shift for multinational organisations in how they align their technology, data and operations. It provides new paths for compliance, but in practice, it may require revisiting systems, data and controls. Solutions and processes implemented for initial filings, now less than 6 months away, will need to be reassessed to ensure they remain efficient and compliant.
What happened
On 5 January 2026, the 147 countries and jurisdictions within OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) agreed a comprehensive package of administrative guidance on Pillar Two. The agreed SbS package includes:
- A permanent Simplified ETR Safe Harbour
- One-year extension of the Transitional CbCR Safe Harbour
- Substance-Based Tax Incentive Safe Harbour
- A Side-by-Side and an Ultimate Parent Entity (UPE) Safe Harbour for eligible countries
- A commitment to periodically review the SbS and UPE Safe Harbour
This preserves the Global Minimum Tax objectives while introducing a set of measures intended to reduce the compliance burdens and enhance tax certainty for organisations.
Why It Matters
The package is significant for two main reasons: the introduction of the Qualified SbS regime and the attempt to streamline calculations through the Simplified ETR Safe Harbour.
As agreed by the G7, the United States is recognised as a Qualified SbS regime. Practically this means, US-headquartered groups will be exempt from IIR and UTPR from 2026 onwards. However the package reinforces the role of QDMTTs, which in most cases will be the primary mechanism for enforcing the Global Minimum Tax. Therefore, Pillar Two remains relevant for US groups.
The measures intended to simplify Pillar Two achieve mixed results. At first glance, the permanent Simplified ETR Safe Harbour may appear straightforward; however, it is complex in practice. The Simplified ETR comes with over 50 pages of detailed guidance. Applying this will involve a highly technical calculation requiring many adjustments, elections and alignment steps to match Pillar Two definitions. Adopting the Safe Harbour will demand significant time and effort to assess if it can be applied, identify the necessary data points and integrate them into workflows. The extension of the Transitional CbCR Safe Harbour will reduce the compliance burden for many groups, but only for one year, it does not remove the underlying need for robust systems.
The OECD has committed to undertake further simplification work later this year.
How Praesto Can Help
Praesto Consulting partners with multinational tax functions to design and implement Pillar Two solutions and processes. We ensure these are built to adapt for change, not just day-one compliance. We help clients address the operational challenges created by these new packages and identify opportunities to drive efficiency:
- Managing large volumes of data – Pillar Two requires huge volumes of data and the new rules only increase that demand. We can help structure data to ensure scalable, repeatable solutions that minimise manual intervention.
- Moving beyond spreadsheets – Manual spreadsheets will not scale to handle the volumes and complexity of data required. We support the transition to controlled, repeatable processes supported by purpose-built technology.
- Designing adaptable solutions – Pillar Two continues to evolve. We design architectures that can be reconfigured to accommodate updates and new guidance without re-implementation.
- Automation, integrations and controls – We focus on automating data flows from source systems and ensuring controls, validations and audit trails are embedded to stand up to scrutiny from auditors and tax authorities.
The Praesto Consulting team has deep experience guiding clients through Pillar Two and related transformations. We’ve helped global tax leaders map out data points, design end-to-end reporting workflows, and configure advanced tax engines. Our Pillar Two Data Readiness Assessment and implementation experience helps to identify gaps in both data and process, prioritise effort and deliver the technology and operating model changes to ensure efficient, accurate compliance.
Learn more
If you are reassessing your compliance solutions in light of the SbS package or still need to implement a system ahead of initial deadlines, now is the time to act.
Get in touch to discuss your Pillar Two readiness with our tax and system specialists.