OECD Pillar Two : Updated FAQ
OECD recently updated its FAQ on Pillar Two in the end of April 2026, which is an update from May 2025 edition. The FAQ has been revamped to the latest Pillar Two rules to provides an overview of the latest PillarTwo rules as well as clarifies on various recent developments. The FAQ is divided into various sections such as Global Minimum Tax (GMT), Simplified ETR Safe Harbour and Side-by-side (SbS) package.
VSTN’s alert captures some of the key clarifications provided in the updated FAQ:
- Simplified ETR SafeHarbour
- Substance in GMT
- Side-by-Side (SbS) and UPE Safe Harbour
- Others – Appeals and CFC regime
Updated FAQ published by OECD
OECD has recently updated the FAQ on Global Minimum Tax (GMT) in April 2026. As compared to May 2025 edition, the updated FAQ majorly covers questions on substance in Global Minimum Tax (GMT), Simplified ETR Safe Harbour and Side-by-side (SbS) package.
Key Aspects
- Substance in Global Minimum Tax (GMT): The updated FAQ provides clarifications on how substance-based income exclusions should be applied, including the treatment of payroll and tangible assets for determining eligible substance.
- Simplified ETR Safe Harbour: The FAQ elaborates on the transitional safe harbour rules that allow MNEs to avoid complex GloBE calculations if certain simplified ETR tests are met, based on CbCR data and financial statement information.
- Side-by-side (SbS) Package: The SbS package covers jurisdictional blending rules, allocation of taxes, and mechanics for determining top-up tax amounts, offering guidance on practical implementation challenges.
- Qualified Status and QTI Monitoring: The FAQ discusses the Qualified Domestic Minimum Top-up Tax (QDMTT) status and ongoing OECD monitoring of Qualified Tax Incentives (QTI), including the parameters that will be used to assess whether incentives qualify for safe harbour treatment.
Key Takeaway
The update in FAQ providing clarifications on certain key aspects is a welcome move, which would aid MNE groups in planning their Pillar Two related compliances. However, OECD’s guidance / inputs on certain areas of QTI is awaited, for example parameters used to monitor QTI as it would play an important role in how jurisdictions formulate their tax incentives and whether the jurisdiction would obtain qualified status.
About us
VSTN Consultancy is a Global Transfer Pricing firm with extensive expertise in the field of international taxation and transfer pricing. VSTN Consultancy has been awarded by International Tax Review (ITR) as Best Newcomer in Asia Pacific – 2024 and is ranked as one of the recommended transfer pricing firms. VSTN has also been nominated in 9 Categories under APAC, EMEA and Middle East Region ITR awards 2025. VSTN has its offices in India and Dubai.
Nithya Srinivasan, Founder of VSTN Consultancy, was named Middle East Transfer Pricing Practice Leader of the Year, recognizing her outstanding leadership and contribution to the profession. VSTN also received the Best Newcomer in the Middle East award from International Tax Review, showcasing its rapid growth and excellence in global transfer pricing advisory.
VSTN Consultancy has been honored with the Best Global Transfer Pricing Consultancy 2025 – India award at the prestigious Wealth & Finance Management Consulting Awards 2025.
Our offering spans the end-to-end Transfer Pricing value chain, including design of intercompany policy and drafting of Interco agreement, ensuring effective implementation of the Transfer Pricing policy, year-end documentation and certification, BEPS related compliances (including advisory, Masterfile, Country by Country report), safe harbour filing, audit defense before all forums and dispute prevention mechanisms such as Advance Pricing agreement. VSTNs senior partners have been ranked in ITR in the list of recognized Practitioners.
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Core Team
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Nithya Srinivasan
Srilakshmi Hariharan
S Ranjani
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Our Licensed Databases
| SNo | Database | Provider |
|---|---|---|
| 1 | TP Catalyst | Moody’s |
| 2 | ORBIS | Moody’s |
| 3 | Loan Module | Moody’s |
| 4 | IP & Royalty Data | Moody’s |
| 5 | Royalty Rates and Benchmark Module | ktMINE |
| 6 | Services CUT | ktMINE |
| 7 | EDF-X Bond Database | Moody’s |
| 8 | EDF-X Credit Risk Analytics | Moody’s |
| 9 | Loan Module | Royalty Range |
| 10 | Transfer Pricing Documenter (formerly Thomson Reuters Onesource) | Ryan |
| 11 | Prowess | CMIE |
As businesses expand across borders, navigating complex transfer pricing regulations becomes critical. At VSTN Consultancy, a global transfer pricing firm, we specialize in helping companies stay compliant and competitive across key markets including:
India | UAE | Singapore | USA | KSA | Dubai | Asia Pacific | Europe | Africa | North America
Whether you’re preparing for benchmarking intercompany transactions, or developing robust TP documentation, our team is here to support your international strategy and Compliance.
Contact us today to explore how we can partner with you to optimize your global transfer pricing approach.
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