Global Anti-Base Erosion Rules (Pillar Two) Side-by-Side Package
Global Anti-Base Erosion Rules (Pillar Two) Side-by-Side Package
The Government has announced it will amend Australia’s global and domestic minimum tax laws to implement the OECD/G20 Inclusive Framework’s Side-by-Side Package. These amendments will apply for income years starting on or after 1 January 2026, ensuring Australia’s Pillar Two rules remain aligned with the international consensus.
The package introduces new safe harbours and administrative simplifications for in scope multinational groups, reflecting the updated OECD design. A key feature of these changes is the accommodation of US interests, ensuring the framework can operate alongside existing US measures such as Global Intangible Low-Taxed Income (GILTI) without immediately triggering top up taxes for US-parented groups.
BDO comment
With the US having already rejected Pillar One, the Side-by-Side Package represents a significant concession by the OECD to accommodate US interests, effectively creating a workaround to ensure that Pillar Two does not impact US-parented multinational groups once the measure takes effect. While the compromise keeps the global project alive, it also underscores that Pillar Two is no longer a uniform minimum tax regime.
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