Introduction
What is true rarely needs to be insisted upon. We should always be mindful of explanatory statements that go on and on about the “benefits” of legislative propositions, or how they advance the interests of many different stakeholders, or how they are effective in supporting some stated policy goal. It almost feels like the drafters are trying to convince themselves of something.
On January 5th, the OECD released the much-anticipated Side-by-Side Package of its Pillar 2 GloBE Rules.2 This is the outcome of a hard-fought agreement between the United States and the rest of the Inclusive Framework. Like the GloBE Rules themselves, it will be subject to the scrutiny of Inclusive Framework members’ courts if their parliaments decide to adopt it. Domestic courts (and among them local constitutional, superior, and/or supreme courts) – and the European Court of Justice in the EU – will likely be the last line of defense between Pillar 2 and key taxpayer rights in democratic countries (e.g., equality and ability to pay).
The document itself has 88 pages and is divided into four major chapters:
Chapter 2 offers tax administrations and MNEs the first part of a new set of permanent “safe harbours”. This “Simplified ETR Safe Harbor” (SESH) allows an MNE to report a zero top-up tax in a “Tested Jurisdiction” if it has a Simplified ETR (Simplified Taxes divided by Simplified Income) of at least 15% in a given fiscal year (or if it has a Simplified Loss in that year).
Chapter 3 extends the application of the Transitional CbCR Safe Harbour (TCSH) to include fiscal years that end on or before June 30, 2029.
Chapter 4 adds a new “safe harbour” to the GloBE Rules, namely the Substance-Based Tax Incentives Safe Harbour (SBTISH). An MNE group may now elect to avail itself of the SBTISH in a Tested Jurisdiction, and if it does, this would reduce its top-up tax in that jurisdiction in a given fiscal year by the amount of Qualified Tax Incentives (QTI) that it has received. QTIs are either expenditure-based or production-based.
Chapter 5 is the blueprint of the actual Side-by-Side system, which adds a couple more “safe harbours” to accommodate the United States. The Side-by-Side Safe Harbour (SbS) exempts MNE groups from the IIR and the UTPR in other jurisdictions and the UPE Safe Harbour (UPESH) only exempts the UPE jurisdiction from the UTPR – the OECD says that the QDMTTs shall not be affected by these two “safe harbours”. QDMTTs are now (and have been for some time, in fairness) the preferential standard for the application of the GloBE Rules.
This is where I go back to optics. The Side-by-Side Package (which includes, but is not limited to Chapter 5) is the product of a technocratic tug-of-war between individuals that represent the United States and other Inclusive Framework jurisdictions before the OECD. These people are by-and-large envoys of these countries’ Executive Branches. Their debates are not disclosed to the public – all we know is that they reached a “consensus”, whatever that means. We suppose it was a difficult decision because of what we read in the specialized media,3 but we may never know the full extent of each country’s views (or if all of the countries were really engaged in the Side-by-Side debates “on equal footing”).4
What we received on January 5th was, at best, a box of a thousand jigsaw pieces with two hundred missing (and with the promise that they will be added later). Legislators will receive that box in the mail and will have to fit those pieces into a broader, million-piece puzzle that is their current tax system (which may or may not have incorporated some or all of the Pillar 2 GloBE Rules). There are two things you must do to convince those legislators even to consider opening your box, let alone to convince judges in the future that the new pieces actually fit within their country’s existing legal order:
First, you must give them the impression that Pillar 2 is a foregone conclusion. If they choose not to act, they will see some “new” tax revenue that they could have collected ending up in the hands of implementing countries. Call it “the rules of the game” in a press conference, like a Brazilian representative of the Federal Revenue did when the president submitted a provisional measure to enact QDMTT into law to the local congress.5 Also, reiterate the fallacy that litigating against Pillar 2 is senseless because, if an MNE group fails to collect a top-up tax in one jurisdiction, some other country will necessarily pick up the tab.6
Second, nice words always help. Your proposal will have to appeal to non-tax specialists both in parliaments and in courts, and you want to make sure that they read it through your lens – that is, the perspective that you and your peers have decided is the most appropriate for the future of corporate taxation. Avoid using words like “risk”, or “uncertain”, or worse yet, “complex”. Focus on words like “safe”, which appears 424 times, or on any word with the root “simpl-”, like “simple”, “simplified”, or “simplification”. In total, those words appear 822 times in the 88-page document of January 5th. That is almost ten times per page.7
This is controversial, but I am not appalled by how complex SESH is. We’ll get into it a little bit below, but it is at best an alternative system, especially if compared to the TCSH in place until June 2029. It doesn’t bother me that much because I don’t think our future as a body of tax professionals is compliance work: machines will outwork us all in that space in the very near future, and big companies will push AI-based giants to find those streamlined solutions, which will be faulty at first, yes (but so are we). We are witnessing that today, and the evolution of what we’re seeing is not us becoming well-versed in AI so that we can teach it to read and adapt OECD proposals to MNEs’ financial statements and tax returns. It’s AI doing it all on its own.8
What worries me is what this means for tax policy. I’m not even referring to how malleable the concepts and abbreviations in the Side-by-Side Package are (you must learn how to read these terms and formulas with the mindset that they might change tomorrow, and the OECD even warns us of this in Chapter 1).9 I’m referring to how “hijacked” our tax policy decisions are becoming in the domain of Pillar 2 – affected constituencies are not proposing Pillar 2, they are receiving it from a supranational body. Our parliaments endorse Pillar 2 because they are convinced by its goals, chief among them making sure that big MNEs pay a minimum level of tax on their profits. We witness this process as bystanders, hoping that Pillar 2 delivers its vaunted revenue gains. Is this reflective of our individual tax policy design preferences? Will the GloBE rules advance our interests or will they raise compliance and litigation costs without a corresponding increase in tax revenues?
You can frame the objectives of Pillar 2 in ways that make them irrefutable. No one should be contented with income inequality, or with how lobbying efforts sometimes bend tax policy in favor of private interests, or with companies selling millions or billions of dollars in a given market and paying little to no taxes to its government by engaging in BEPS practices. Tax policy design choices have led us to this world and should be changed if we want to transform it. The problem is, to make Pillar 2 “work”, you have to subvert rights and standards of local tax systems. You have to treat MNE group entities as a single enterprise even if local income tax rules treat them as separate entities. You have to treat some kinds of tax incentives differently from others. You have to cap deductions with fines even if your local income tax rules allow certain types of fines to be deducted without any limitation (and the GloBE top-up taxes are taxes on income). My contention is that these concessions undermine the consistency of local tax systems and should not be accepted by local governments (or by local courts) in the name of Pillar 2’s goals, however laudable they might be.
The Simplified ETR Safe Harbour (SESH)
With its 58 pages, Chapter 2 is over half of the entire Side-by-Side Package. It is supposed to “simplify” the calculations of the GloBE Income or Loss and of the Adjusted Covered Taxes under Pillar 2, but what it does is add a whole new chapter to them. MNEs with gross revenues of over EUR 750 million have at least been aware of Pillar 2 for five or six years by now. They are likely going to calculate their top-up taxes considering (a) the full GloBE Rules as well as (b) all of the “safe harbours” available to them in the jurisdictions where they have Constituent Entities. SESH is not a replacement: it’s an add-on. Another patch in the Pillar 2 patchwork of rules. Another avenue for litigation, especially for those entities that find themselves unfairly excluded – and by that I mean unfairly excluded in light of local constitutional standards – from SESH.
Here are some of the things that caught my attention as I read through Chapter 2 and the SESH rules. This is by no means exhaustive or final (none of the GloBE Rules or Commentary will ever be “final”):
Paragraph 42 of Section 3.2.3 says that the threshold for adding back fines and penalties is EUR 250,000 instead of EUR 50,000 under the SESH. It also says that this threshold is applicable on a “per penalty” basis “as the one for fines and penalties in Article 3.2.1(g).”10
Going back to my analogy of the jigsaw puzzle with missing pieces, paragraph 69 of Section 3.4.2 says that removing the Purchase Price Allocation in M&A transactions from financial statements is complex and carries an administrative burden. This is going to be the subject of future guidance to be discussed and prepared by the Inclusive Framework.11
Paragraphs 75 to 80 show an example where a Parent Entity is required to add back to Simplified Income the goodwill impairment that it recorded in the 5th year post-acquisition of a Constituent Entity. This has to do with the “M&A Simplification” of SESH, but paragraph 74 frames it as an impairment “that does not have a corresponding deferred tax liability.” Paragraph 80 says that this is an adjustment required to “[eliminate] a distortive effect to the Simplified ETR”.12
Paragraph 83 of Section 3.5.1 (and the rest of that Section, really) is the prime example of why I argue that SESH is an “alternative”, but not a simplified set of GloBE calculations.13 The fact that MNE groups are able to make all sorts of elections under SESH means they will have to keep track of what their top-up taxes will be with them as well as without them, if or whenever they apply to their business. Also, the fact that five-year elections must “continue [to be applied]” until they are revoked can in and of itself be a source of litigation.14 See also paragraphs 89 and 91 of Section 3.5.2.
Paragraph 93 of Section 4.2.1 says, sic et simpliciter, that the adjustments MNEs are allowed to make to their Jurisdictional Income Tax Expense (JITE) “are intended to reflect the design choices of the GloBE Model Rules and preserve their intended policy outcomes.”15 Pay close attention to the language used by the OECD here. Choices were made to preserve some intended policy outcomes. Put aside for a moment your own impressions about those adjustments (and whether they make sense to you considering the rest of the GloBE Model Rules). Who made those choices? Policy outcomes intended by whom?
Paragraphs 112 to 117 of Section 4.3 bring to SESH the rules of the Excess Negative Tax in the Commentary to Articles 4.1.5 and 5.2.1 of the GMR. I have said in the past that whether you choose to pay this tax in the year where it “appears” (essentially due to a difference in your deferred tax assets for accounting and GloBE purposes) or whether you are required to carry it forward to a year in which you have a positive ETR, no tax on income should be imposed on an event that does not represent an accretion to the Constituent Entity’s wealth (i.e., an acquisition of income). If you have no income, you should not be required to pay or account for a tax on income.16
Paragraph 121 of Section 4.4.3 relieves MNE groups from having to analyze whether their tax incentives fit the definition of Qualified Refundable Tax Credits (QRTCs) or Marketable Transferable Tax Credits (MTTC) under the SESH. They can elect to do so if they wish, though (paragraph 122). I have raised in the past the issue that some QRTCs may be in fact Non-Qualified (NQRTCs) because of design choices made by implementing jurisdictions (even if local tax authorities claim that the credit is qualified).17
Section 7.2.1, and particularly the table below paragraph 184, is an example of what I mean by litigation related to unfair exclusions from SESH. If an MNE group has reported a top-up tax in any of the two years (24 months) preceding the year in which it wishes to apply the SESH in a Tested Jurisdiction, that jurisdiction becomes ineligible for the SESH and the group will have to calculate GloBE using the regular rules.18 Think of it in terms of Y2, Y1, and Y0 (the current year). If an implementing jurisdiction’s income tax system only removes taxpayers from special regimes based on what their profits or revenues were in Y1, not in Y2, those taxpayers might be able to argue before local courts that whatever happened in Y2 should not limit their right to pursue a simplification under SESH (again, because the top-up tax is an income tax and it is added to a preexisting income tax system, with rules applicable for income taxes in general). What about a group A that only enters the Tested Jurisdiction in Y0, but is fundamentally equal to a group B that has been in it for a couple of years and had a top-up tax in Y2? Why should B’s local entities be barred from the SESH if A’s entities are able to use it? The same questions apply to the so-called “re-entry requirements” discussed in Section 7.2.2.19
These are just some highlights of what must have been a very laborious project (and it shows). I think of the many hands that wrote the words in Section 2, the many brains that pondered its new terms – whether they were aligned with previous ones and whether they “simplified” the GloBE calculations in meaningful ways. It is a titanic effort, perhaps with a capital “T”.
Extension of the Transitional CbCR Safe Harbour (TCSH)
I vividly recall giving a lecture about the GloBE Rules in March 2025, and when we discussed their “safe harbours”, I said that they would likely be extended for at least another year. I did not know at the time about the SESH, but yes, because of it, the OECD now says that the TCSH will be extended to Fiscal Years beginning on or before December 31, 2027, but not including a Fiscal Year that ends after June 30, 2029.[20]
Substance-Based Tax Incentive Safe Harbour (SBTISH)
The SBTISH eliminates the GloBE top-up tax that would have otherwise been attributable to what the OECD calls a Qualified Tax Incentive (QTI). This “safe harbour” operates by (i) adding the amount of QTIs to the Adjusted Covered Taxes of the Constituent Entities of a given jurisdiction or by (ii) adding the “Substance Cap”, if the amount of QTIs exceeds a certain threshold. With higher Adjusted Covered Taxes, chances are the group will have a smaller amount in top-up taxes (or none at all) to pay in the relevant Fiscal Year.
A QTI is a tax incentive that is generally available to the taxpayers of a given jurisdiction, but only to the extent that its amount is based on (a) expenditures incurred, or (b) the amount of “tangible property produced in the jurisdiction”. So they are essentially expenditure-based or production-based tax incentives, and those might include a QRTC or an MTTC “when the Filing Constituent Entity has made an Annual Election to treat that credit as a QTI.”21
The SBTISH is a part of the regular GloBE Rules, but it is also available for MNE groups that opt for the SESH.22 As for the things that caught my attention:
Paragraph 8 of Section 2.1.2 says expenditure-based incentives shall not be qualified “if the value of the tax benefit of the incentive exceeds the expenditure (upon which the amount of the incentive was calculated) incurred.” This seems like an all-or-nothing rule – it would not enable a “super deduction” of 300% of the relevant expense to be treated as a QTI up to 100% if its corresponding tax benefit exceeds the amount of that expense. What if the incentive is designed as a “super deduction” that can reach up to 300% of the target expense, but the group only received an extra deduction of 60%? Would the design of the incentive mean that it is not a QTI, even if its practical outcome is qualifiable?23
Paragraph 11 of Section 2.2 is very clear in saying that production-based tax incentives do not include those based on the “value” of production – these incentives will only be QTIs if they are based on the “volume” of production (e.g., number of widgets produced in a given period). Also, production-based incentives will only be QTIs if they are based on the production of (x) tangible property (y) in the jurisdiction. Not intangible property (like digital goods, NFTs and so on) and not tangible property in a jurisdiction other than the one that grants the relevant incentive.24
Paragraph 14 of Section 2.3 says that a tax incentive will not be disqualified as a QTI simply because the taxpayer did not use it when it was calculated. I notice that this says nothing about the statute of limitations in the relevant jurisdiction, but does refer to incentives that are “utilized” (which makes sense).25
Paragraph 15 of Section 2.4 is a bit cryptic because it says that a tax incentive must be “generally available” to taxpayers to qualify as a QTI. Then it gives an example of an incentive that, via “specific legal restrictions”, is only provided to in-scope MNE groups.26 The thing is, many tax incentives in place today have eligibility criteria, some more stringent or restrictive than others. At what point would they become too restrictive for a qualification of the incentive as a QTI?
Paragraph 30 of Section 4 draws a connection between the SBIE and the Substance Cap, and it says that “reliance on the same factors […] will reduce compliance costs and the potential for disputes.” The next sentence, however, says that “some additional flexibility” was added to the calculation of the Substance Cap “[to] better [align it] with the design of existing substance-based tax incentives” (e.g., the fact that Eligible Payroll Costs for purposes of the Substance Cap also include payroll costs that are capitalized and included in the value of Eligible Tangible Assets, which is not allowed under the SBIE).27
In a vacuum, the SBTISH is a positive development for the GloBE Rules. It is a recognition of the policy space that implementing countries should have when it comes to substance-based tax incentives. I expect MNE groups to challenge local tax authorities and push for their income-based tax incentives to be recognized as QTI, even if that violates the GloBE Rules (depending on the group, the QDMTT Jurisdiction may be the only government entitled to tax the excess profits of the relevant Constituent Entities). I expect other kinds of definitional challenges to arise as well, like what qualifies as an expenditure-based or a production-based tax incentive, or how “general” must an incentive be to qualify as a QTI, and so on.
The Side-by-Side System
This is the part of the document that outlines the structure of two new “safe harbours” in the GloBE landscape: the Side-by-Side Safe Harbour (SbS), which exempts MNE groups from the IIR and the UTPR in other jurisdictions, and the UPE Safe Harbour (UPESH), which only exempts the UPE jurisdiction from the UTPR. Before I get into them, I must address the language used in paragraph 1 of Chapter 5 – the brief explanation as to why the Inclusive Framework agreed to the demands of the United States for a side-by-side system. The part of the paragraph I am referring to is transcribed here:
[…] Where such tax regimes have and maintain similar policy objectives, overlapping scope, and a complementary policy impact as the GMT, taking into account the success of qualified domestic minimum top up taxes (QDMTTs), and based on the commitment of members to address any BEPS or level playing field risks arising from the GMT and its interplay with the SbS System, the Inclusive Framework has agreed to the SbS and UPE Safe Harbours that apply to MNE Groups headquartered in jurisdictions which the Inclusive Framework has determined meet the requirements for an eligible tax regime.
First things first, there is no such thing as a “level playing field”, and in Pascal Saint-Amans’ memoir he says that a similar expression (“on equal footing”) was used by the OECD as a “slogan”, one that invited tax havens and developing countries to sit around the table “while decisions unfavorable to them were being made.”28 Paragraph 1 of Section 5 refers to a “level playing field”, and right away you know that it is using the same kind of verbiage to convince local parliaments (and courts) to go along with Pillar 2 now and in the future.29
Second, and this is just as important, the jury is still out on the “success” of the QDMTTs around the world. Yes, in a way they were successfully implemented by certain countries (and among those, by countries bound by a communal Directive). But “success” is miles away from where we are with QDMTTs. Their rules are yet to be tested before local courts, and all it takes is for some of those rulings to favor MNE groups, which then leads to implementation asymmetries, which incentivizes forum shopping, which can undermine the entire Pillar 2 project in a few years.
Finally, calling everything a “safe harbour” is a problem because you are using one label to define different sorts of exceptions (or add-ons) to the GloBE Rules. There is a key difference between the SESH or the SBTISH and something like the SbS or the UPE SH: to access the first two, all MNE groups must do is meet their requirements (even if those are themselves subject to challenges). To access the other two, MNE groups must first wait for a decision of the Inclusive Framework as to whether the jurisdictions they operate in are in-scope or not. A jurisdiction may meet the criteria described in Section 5, but it will only be qualified for either the SbS or the UPE SH if it appears on a list (and, no surprise, the first and so far only jurisdiction in the SbS list is the United States).30
Here is a short list of things that caught my attention in this Chapter:
Paragraph 7 of Section 1.2 makes it clear that the two new “safe harbours” should not affect the QDMTT. One key passage of the paragraph says that a QDMTT “will continue to apply […] without taking into account taxes imposed on [PEs] or direct and indirect owners in respect of income of their [CFCs].”31 This reminds me of the debate about allowing the U.S. GILTI to be “pushed down” as a Covered Tax on the level of foreign subsidiaries, which could end up minimizing or eliminating local QDMTTs altogether.32
Paragraphs 9 to 18 of Section 1.4.1 break down the three criteria for a jurisdiction to be considered eligible for the SbS. It must first have what is called an “eligible domestic tax system”, with (a) a nominal tax rate of at least 20%, (b) a local QDMTT or a corporate alternative minimum tax at a nominal rate of 15% or above, and (c) no material risk of ETR outcomes below 15%. The criterion in (c) is by far the most subjective of the three, since the OECD defines a “material risk” as a risk “of significant magnitude and probability that policymakers would foreseeably consider it as the basis for revising an applicable tax regime.” Paragraphs 16 and 17 will be the subject of much ink on paper, I’m sure.33
Paragraphs 19 to 24 of Section 1.4.2 address the second aspect of eligibility for the SbS, and that is having an “eligible worldwide tax system”. Its three criteria are: (a) having a comprehensive tax regime applicable to all corporations on foreign income, (b) having tools or “mechanisms” to address BEPS risks, and (c) having no material risk of ETR outcomes below 15% for foreign income. Here I would argue that all three criteria are somewhat subjective, since (a) accommodates exceptions that are “consistent with the policy objectives of minimum taxation”, (b) says that the BEPS-related mechanisms must be “targeted and substantial”, and (c) is the same (c) of paragraphs 16 and 17 of Section 1.4.1.34
Paragraph 36 of Section 2 clarifies the difference between the SbS and the UPE SH. Leaving the QDMTTs aside, the SbS is a sort of universal “safe harbour” that applies to Constituent Entities of an MNE group if the UPE of that group is located in a jurisdiction that has a Qualified SbS Regime. The UPE SH, on the other hand, is a protection against the UTPR (not the IIR) and is only afforded to the Constituent Entities located in the UPE jurisdiction (so not all the Constituent Entities of the group).35
I will not get into my full spiel about how the UTPR violates some of the most basic tenets of corporate taxation in democratic settings. I have written two articles on the subject for Tax Notes,36 and others have published excellent pieces on the incompatibility of the UTPR with customary international tax law, tax treaties, and EU law.37 What I do note is that the two “safe harbours” share the UTPR as a common enemy, and I wonder whether the inclusion of new regimes as qualified for SbS or UPE SH purposes will undermine the UTPR – in terms of its practical application – faster than tax litigation across the globe. For some countries, Pillar 2 without a UTPR is really just an invitation to put a QDMTT in place (and for what?).
Final remarks
“Sunk cost fallacy” is the idea that a project should be continued because a great deal of money and time has already been invested in it. It is a fallacy because past investments have no bearing on the future – or on the chances of success – of any project. The more you believe in it, the more you invest, digging yourself further and further into the ground. Moreover, the more money you have spent on a project, the more likely you are to become its most fervent supporter. You can’t seriously kill it now – what would that say about you and your future ideas? People who have spent truckloads of cash on your project might turn on you.
I said earlier that AI will handle Pillar 2’s complexities better than any human at some point in the future. I can also admit that we are not there just yet: companies are already spending far more money to comply with Pillar 2 (whether by paying staff, hiring external advisers, or even purchasing tax compliance software) than they anticipate they will have to pay in GloBE top-up taxes. If you think that’s fine because AI will one day cut those expenses and streamline the application of GloBE Rules, you’re clearly not factoring in litigation and implementation asymmetries. At this point, we should really question the viability of Pillar 2 as a global tax policy initiative, and whether we’re only moving forward with it because “we’re there already.”38
¹. Lucas de Lima Carvalho is the founder of the Latin American Tax Policy Forum. He is based in São Paulo, Brazil.
². See OECD. Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two), Side-by-Side Package. Paris: OECD, 2026.
³. See, for example, SOONG, Stephanie. Countries Get Pillar 2 Side-by-Side System Deal Over Finish Line. Tax Notes Today International, published on January 6th, 2026. See also SHOLLI, Sam. This week in tax: China adds to growing list of US pillar two carve-out dissenters. International Tax Review, published on December 12, 2025. Furthermore: LAMER, Elodie; and PETITJEAN, Sophie. Pillar 2 Expected to Be Elephant in the Room at ECOFIN. Tax Notes Today International, published on December 12, 2025.
⁴. See, with comments on Pascal Saint-Amans’ memoir and the origins of the expression “on equal footing”, CARVALHO, Lucas de Lima. Paradis Fiscaux and the Role of Minilateralism. Tax Notes International, published on November 10, 2025, p. 923-938.
⁵. See YOUTUBE. Coletiva de imprensa Ministério da Fazenda. Ministry of Finance of Brazil, posted on October 4th, 2024, timestamp [1:09:39] to [1:09:57] (translated from Portuguese by the author).
⁶. For further discussion, see CARVALHO, Lucas de Lima; LINO, Thiago; and PAIVA, Germano Alves. CRISPR, Biological Assets, and GloBE. Tax Notes International, published on October 13, 2025, p. 303-317.
⁷. “Risk” appears a total of 41 times in the document, but most references concern addressing risk rather than identifying it. “Uncertain” appears 12 times, but many of those instances refer to “uncertain taxes” or “uncertain tax positions”, terms found in the GloBE Model Rules. “Complex” and its derivative forms appear only five times. See OECD, supra note 1.
⁸. For further discussion, see AQUINO, Anita do Vale Palmeira de; and CARVALHO, Lucas de Lima. AI and the Future of In-House Tax Professionals. Tax Notes International, published on September 4th, 2023, p. 1183-1191.
⁹. “While the Simplified ETR Safe Harbour represents a significant step towards simplification of the rules, the Inclusive Framework recognises that the journey does not stop here and commits to a work programme to achieve additional clarifications and simplifications […].” See OECD, supra note 1, p. 7. “In furtherance of [the] commitment [to preserve the common policy objectives of the GMT and the SbS system], the Inclusive Framework will undertake a stocktake pursuant to an evidence-based objective process to be agreed by the Inclusive Framework and concluded by 2029.” Id., p. 8-9.
¹⁰. See OECD, supra note 1, p. 29.
¹¹. Id., p. 36.
¹². Id., p. 38. This example does not consider the deductibility of goodwill for tax purposes, which is a feature of the Brazilian corporate tax system (also because the example is not really about goodwill, but about the deferred tax liability associated to the revaluation of a tangible asset and its effect on the purchase price allocation, which is the source of an entirely accounting-based “goodwill”). It may generate a (probably reversible) deferred tax liability or even a deferred tax asset after a reverse merger. See, discussing this topic and others related to the QDMTT and business combinations, BEZ-BATTI, Gabriel. Adicional de CSL e Combinações de Negócios no Brasil. Revista Direito Tributário Internacional Atual, V. 14. São Paulo: IBDT, 2025, p. 64-79 (in Portuguese). See also LINO, Thiago; and SILVA, Fabio Pereira da. Balanços Individuais na combinação de negócios: A irrelevância da intenção da administração das companhias para constituição do passivo fiscal diferido. In: PINTO, Alexandre Evaristo; MURCIA, Fernando Dal-Ri; SILVA, Fabio Pereira da; and VETTORI, Gustavo G. Controvérsias Jurídico-Contábeis – Volume 6. São Paulo: NSM Editora, 2025, p. 305-328 (in Portuguese).
¹³. See OECD, supra note 1, p. 38-39.
¹⁴. See CARVALHO; LINO; PAIVA, supra note 5, p. 314-315.
¹⁵. See OECD, supra note 1, p. 42.
¹⁶. Id., p. 44-46. See CARVALHO, Lucas de Lima. GLOBE and the Excess Negative Tax. Tax Notes International, published on April 14, 2025, p. 235-244.
¹⁷. See OECD, supra note 1, p. 47. See also CARVALHO, Lucas de Lima. The Brazilian QDMTT: Playing by the Rules. Tax Notes International, published on January 6th, 2025, p. 88.
¹⁸. See OECD, supra note 1, p. 63-64.
¹⁹. Id., p. 64-65.
²⁰. Id., p. 68.
²¹. Id., p. 70.
²². Id., p. 47 (paragraph 124, Section 4.4).
²³. Id., p. 72. And this can evidently be subject to litigation in GloBE implementing jurisdictions.
²⁴. Id., p. 73.
²⁵. Id., p. 74.
²⁶. Id.
²⁷. Id., p. 78 (also paragraph 31).
²⁸. See SAINT-AMANS, Pascal. Paradis Fiscaux: Comment On A Changé Le Cours De L’Histoire. Paris: Seuil, 2023, p. 306 (translated from French by the author).
²⁹. See OECD, supra note 1, p. 79.
³⁰. See OECD. Central Record for purposes of the Global Minimum Tax: Qualified SbS Regimes. Updated as of January 5th, 2026.
³¹. See OECD, supra note 1, p. 81.
³². See, for example, SAEED, Saim; and VELLA, Lauren. OECD’s ‘Side-by-Side’ Tax Deal for US Critiqued by 28 Countries. Bloomberg Tax, published on August 25, 2025. See also COLE, Alan. Side-by-Side Pillar Two Deal a Good Start Toward Tax Simplicity. Bloomberg Tax, published on September 4th, 2025.
³³. See OECD, supra note 1, p. 83.
³⁴. Id., p. 83-84.
³⁵. Id., p. 86.
³⁶. See CARVALHO, Lucas de Lima. The Constitutional Case Against the UTPR in Brazil. Tax Notes International, published on January 30, 2023, p. 609-618. See also CARVALHO, Lucas de Lima. The UTPR: A Symptom of Malleable Sovereignty? Tax Notes International, published on August 5th, 2024, p. 871-881.
³⁷. See BRÄUMANN, Peter; DOUMA, Sjoerd; KARDACHAKI, Alexia; KOFLER, Georg; and TUMPEL, Michael. The UTPR and International Law: Analysis from Three Angles. Tax Notes International, published on May 23, 2023, p. 857-882. See also CHAISSE, Julian; CHAND, Vikram; DEBELVA, Filip; HONGLER, Peter; and MOSQUERA, Irma. UTPR – Potential Conflicts with International Law? Tax Notes International, Volume 111, Number 2. Falls Church: Tax Analysts, 2023, p. 141-151. Furthermore: LI, Jinyan; and NIKOLAKAKIS, Angelo. UTPR – No Taxation Without Value Creation! Tax Notes International, published on April 3rd, 2023, p. 49-59.
³⁸. To quote former Obama administration advisor David Tafuri, who in an interview in December 2018 answered a question about keeping 2,000 U.S. troops in Syria with “first of all, we are there already and it’s successful, so why pull out?” See YOUTUBE. Tucker Takes On Obama Aide Over Trump Pulling Troops. Fox News, posted on December 19, 2018, timestamp [04:17-04:29].