Cross-border Tax Talks Pillar Two: The Side-by-Side Package
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Jan 9, 2026 Beth Bell, a Principal at PwC's Washington National Tax Services, lends her extensive experience in tax policy to discuss the OECD’s January 2026 side-by-side package. She highlights how political dialogue resolved initial objections from countries like China and Estonia. The conversation dives into the implications of new qualified tax incentives and the functioning of the simplified ETR safe harbor. They explore congressional responses and emphasize the importance of QDMTTs for public companies, while advising taxpayers on compliance essentials for the upcoming changes.
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How Consensus Was Reached
- The side-by-side package succeeded because political incentives aligned and late concerns were resolved through dialogue and compromise.
- The agreement's flexibility and procedures for joining made it politically easier for jurisdictions to accept the deal.
Agreement Needs Domestic Law
- The side-by package is political and not self-executing; it requires domestic legislation to take effect in most jurisdictions.
- Only a handful of countries automatically incorporate OECD administrative guidance into domestic law, so enactment timing matters for taxpayers.
Check Enacted Law For Accounting
- Public companies must assess enacted‑law status of side‑by provisions for Q1 accounting and provision work this year.
- If jurisdictions haven't enacted rules by measurement dates, companies may need to provide for top-up tax under enacted‑law accounting.