In September 2026, the OECD published an additional updates package as part of the implementation of the Pillar Two rules—the Global Minimum Tax. The update does not alter the fundamental principle of the minimum tax regime, but rather focuses on transitioning into a more practical phase of reporting, oversight, and consistent implementation of the rules across different jurisdictions.
Among the key highlights: an updated Global Information Return, the establishment of a peer review framework for domestic legislation enacted in various jurisdictions, and further guidance regarding the implementation of the minimum tax rules.
What is Pillar Two?
Pillar Two is part of the international tax reform developed under the OECD/G20 Inclusive Framework.
At the core of the framework is a mechanism designed to ensure that large multinational enterprise (MNE) groups within its scope are subject, as a rule, to an effective tax rate of at least 15% in each jurisdiction where they operate, in relation to the income included in the calculation and in accordance with the mechanics set out in the rules.
Where the calculated effective tax rate in a given jurisdiction is below 15%, a top-up tax liability may arise, subject to the rules, exclusions, and safe harbors applicable to the group.
It is important to emphasize that this system is far more complex than a simple check of the statutory corporate tax rate in a given country. The calculation is based on a dedicated set of rules for determining eligible income, covered taxes, the effective tax rate, and the top-up tax.
First Update: Updated Global Information Return
One of the key components of the September package is the release of an updated version of the GloBE Information Return (GIR) for global minimum tax purposes.
This is a standardized return through which tax authorities are provided with the information necessary to assess the correctness of a group’s tax liability under the global minimum tax rules.
The new version incorporates the changes and simplifications included in the administrative guidance package approved in January 2026.
The updated return will apply to reporting for fiscal years beginning on or after December 31, 2025. Concurrently, an updated technological schema is being developed for the submission and exchange of information between tax authorities.
The practical implication is that dealing with Pillar Two does not end with calculating the effective tax rate and the top-up tax. In-scope groups are also required to prepare for collecting, processing, and reporting vast amounts of data from various entities and jurisdictions across the group.
Second Update: Peer Review of Domestic Legislation
Another significant development is the publication of a comprehensive peer review framework for the domestic legislation through which countries implement the global minimum tax.
Participating jurisdictions will be able to perform detailed reviews of the legislation adopted by implementing countries, aiming to ensure that it aligns with the Model Rules and the international consensus interpretations.
Where inconsistencies are identified, recommendations may be issued to assist the relevant jurisdiction in rectifying them.
This is a particularly crucial point.
Pillar Two is implemented via domestic legislation in various countries; therefore, without coordination, discrepancies could arise in how different jurisdictions interpret and apply the same principles.
The review mechanism is intended to promote a more consistent and coordinated implementation, enhance tax certainty for international groups, and reduce compliance costs resulting from divergent outcomes between countries.
Third Update: Conditional Taxes Are Not Necessarily Covered
The OECD also issued additional guidance regarding certain taxes that are explicitly levied only when a taxpayer is subject to Pillar Two top-up tax mechanisms in another jurisdiction.
The guidance clarifies that such taxes, when explicitly contingent upon the application of those mechanisms in another country, will not be treated as covered taxes for the purpose of calculating the effective tax rate under the global minimum tax rules.
This means that a jurisdiction cannot simply impose a tax that is triggered solely by the application of a top-up tax mechanism elsewhere and expect that tax to reduce the top-up tax calculated under Pillar Two.
The OECD further announced its intention to continue issuing guidance regarding additional characteristics of discriminatory taxes through the end of 2026.
Fourth Update: Discrepancies Between Reporting Periods
The September guidance also addresses situations where, for the purposes of a Qualified Domestic Minimum Top-up Tax (QDMTT), financial statements prepared under local accounting standards are used, but the local reporting period does not match the fiscal year of the ultimate parent entity (UPE) of the group.
For example, the parent company of an MNE group might report on a calendar year basis (January to December), while a group entity in another country prepares its local financial statements for a period running from April to March.
The OECD clarified that, subject to meeting the relevant conditions, such a gap in reporting periods does not in itself disqualify an entity from benefiting from the safe harbor applicable to the local minimum top-up tax.
While this is a technical clarification, it is highly important for groups operating in jurisdictions where differences exist between local reporting periods and the group’s consolidated fiscal year.
What Does This Mean for International Groups?
The September 2026 update illustrates a clear trajectory: Pillar Two is shifting from policy design to operational implementation.
For international groups subject to the rules, navigating Pillar Two is no longer just a matter of whether the tax rate in a specific country is below 15%.
It requires addressing a broader spectrum of issues, including:
– Calculating the effective tax rate in each jurisdiction;
– Evaluating potential top-up taxes;
– Collecting data from group entities across multiple jurisdictions;
– Meeting global and local compliance and reporting requirements;
– Monitoring domestic legislation enacted in every country where the group operates;
– And staying continually updated on administrative guidance and safe harbors released by the OECD.
The OECD itself highlights that consistent implementation across countries is a cornerstone for achieving tax certainty and reducing compliance burdens for both MNEs and tax administrations.
In Conclusion
The September 2026 publication does not alter the minimum tax rate itself, but represents a further step in building the practical infrastructure for Pillar Two execution worldwide.
An updated Global Information Return, a legislative peer review framework, guidance on conditional taxes, and the resolution of reporting period mismatches—all reflect a gradual transition from an international rulebook to an active, operational reporting and enforcement regime across an expanding number of jurisdictions.
For MNE groups, this underscores the importance of examining not only whether the minimum tax rules apply, but also the readiness of their data collection, reporting, and compliance frameworks across every country in which they operate.
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Avieoz Aharon, CPA & Attorney-at-Law
International Taxation | US Taxation | Israeli Taxation
Tax Advisory & Planning | MNEs and Global Corporate Groups
The content of this article is for general informational purposes only and does not constitute tax or legal advice, nor should it replace a thorough review of the specific facts and circumstances of any individual case.