The impact of the G7’s Pillar Two statement on U.S.-parented multinational groups

Publication

27-01-2026

Our tax professionals recently contributed an article to Tax Notes International titled “The impact of the G7’s Pillar Two statement on U.S.-parented multinational groups.” This article outlines how the G7’s political statement on Pillar Two reshapes the application of the global minimum tax to U.S.-parented multinational enterprise groups. This article was finalised on 29 December, 2025, prior to the release of the OECD’s Side-by-Side package (for details on the Side-by-Side Package, reference is made to our *Tax Flash).

On June 28, 2025, the G7 released a political agreement proposing a "Side-by-Side” system that would exclude U.S.-parented multinational groups from the Income Inclusion Rule and Undertaxed Profits Rule, for domestic as well as foreign income. This development had significant implications for the impact of Pillar Two U.S.-parented groups but leaves open important legal and technical questions regarding its implementation.

This article provides an overview of the background of Pillar Two, the developments leading to the G7 agreement, the intended practical impact on U.S.-parented groups, and the key uncertainties that remain -both in terms of the legislative process and the design of the substantive rules for the Side-by-Side system.

The full article can be downloaded here: