{{item.videoDuration}}
{{item.title}}
{{item.text}}
{{item.videoDuration}}
{{item.text}}
What happened?
On 5 January 2026, the OECD announced that 147 members of the Inclusive Framework (IF) on BEPS have agreed to a new package of administrative guidance under the Pillar Two global minimum tax rules (the ‘GloBE rules’). The agreed Side-by-Side Package (‘the Package’) includes a substance-based tax incentive safe harbour (SBTI SH). The favourable treatment of Qualifying Tax Incentives (QTIs) applies for fiscal years starting on or after 1 January 2026.
Why is it relevant?
The SBTI SH defines QTIs as those based on eligible expenditures or on the volume of tangible in country production, subject to a Substance Cap (defined below). QTIs are added to Covered Taxes (or Simplified Taxes) to compute the ETR but are excluded from GloBE Income. As a result, the treatment of an incentive as a QTI could be more beneficial to an MNE Group than the treatment provided for Qualified Refundable Tax Credits (QRTCs) and Marketable Transferable Tax Credits (MTTCs). For parity, groups may elect to treat QRTCs and MTTCs as QTIs.
Key actions businesses can take today
MNE Groups should review the Package to understand which aspects they can or must apply, in which jurisdictions, and what the SBTI SH means for the purposes of computing GloBE ETRs in select jurisdictions. Businesses should be aware that the SBTI SH included in the OECD’s Administrative Guidance is not self-executing and must now be legislated domestically by each member in accordance with their own processes and timelines (subject to possible European Union (EU) guidance related to the EU minimum tax Directive).
PwC's Tax Policy Bulletin
Substance-based tax incentive safe harbour for Pillar Two Groups
{{filterContent.facetedTitle}}
{{contentList.loadingText}}
{{contentList.loadingText}}
Contact us
Follow PwC Ireland
Menu