New Administrative Guidance

The new Administrative Guidance addresses two specific topics. First, it confirms that taxes that apply only where a taxpayer is subject to a Qualified IIR or UTPR in another jurisdiction (so-called "Explicitly Conditional Taxes") will generally not qualify as Covered Taxes for GloBE purposes. The Inclusive Framework also announced that further guidance on other potentially discriminatory tax features is expected before the end of 2026. Second, the guidance clarifies the operation of the QDMTT Safe Harbour where local financial accounting standards are used and fiscal periods do not align with the UPE's Fiscal Year. As with other OECD Administrative Guidance, the practical impact of these clarifications will ultimately depend on their implementation in domestic Pillar Two legislation by the jurisdictions concerned.

Updated GIR

The Inclusive Framework also published an updated GIR, incorporating the changes to the GloBE Rules of the January 2026 Side-by-Side Package, including the permanent safe harbours and other agreed simplifications (see our previous article here). The changes will apply to GIRs relating to fiscal years commencing on or after 31 December 2025. A revised XML schema is expected to follow.

Full legislative review framework

In addition, the OECD released the Terms of Reference and Assessment Methodology for the Full Legislative Review. Currently, implementing jurisdictions have performed a self-assessment to determine whether their legislation is consistent with the OECD/Inclusive Framework's GloBE Rules. However, as previously announced, this is only a temporary measure and a peer review will be required to determine qualified status going forward. This document establishes the peer review framework that Inclusive Framework members will use to assess whether domestic IIR, UTPR and QDMTT legislation is consistent with the GloBE Model Rules, Commentary and Administrative Guidance.

The timing of the reviews will depend on when jurisdictions initiate the process and when their rules took effect. Jurisdictions whose legislation became effective on or before 1 April 2025 generally benefit from a transitional three-year period to initiate the review. Which means that the peer review process is expected to be rolled out soon for the first adopters of the GloBE Rules.

Takeaways

While much of the package is administrative and technical in nature, it provides further clarity on several technical questions and provides a welcome next step in the practical implementation of the Side-by-Side package.

At the same time, important interpretative questions for taxpayers remain outstanding, including the application of the GloBE Rules to joint ventures and the impact of intra-year restructurings and M&A transactions. Additional interpretative guidance on these and other topics would therefore be welcome. For the moment, however, the package only announces further guidance in relation to discriminatory taxes and related tax benefits provided by jurisdictions in connection with the GloBE Rules.

Contact

Should you have any questions in relation to the above, please contact your regular Loyens & Loeff adviser or one of the advisers mentioned below.