1. Is the group within scope?
The starting point is the group’s consolidated revenue history, financial period, entity characteristics and relevant exclusions. A preliminary assessment identifies whether further analysis is needed.
Reference: Model Rules, Article 1
2. Which entities and jurisdictions matter?
The ownership structure helps identify the ultimate parent entity, intermediate parents and overseas operations. Different entity types may require separate treatment.
Reference: Model Rules, Articles 1.2–1.4 and 10.3
3. What income and taxes enter the calculation?
GloBE income and adjusted covered taxes are technical measures. Accounting profit and tax expense may require adjustments before they can be used.
Reference: Model Rules, Chapters 3 and 4
4. How is indicative exposure calculated?
A simplified calculation considers the jurisdictional effective tax rate and excess profit after the substance-based income exclusion. Additional rules can change the outcome.
Reference: Model Rules, Articles 5.1–5.3
5. Where could tax be collected?
Domestic minimum top-up taxes, the Income Inclusion Rule and the Undertaxed Profits Rule perform different roles. Broadly, a qualified domestic minimum top-up tax allows the jurisdiction where the profits arise to collect top-up tax first. The Income Inclusion Rule then applies at parent level, and the Undertaxed Profits Rule acts as a backstop for any top-up tax that remains. Their application needs to be assessed together, for each jurisdiction and period.
Reference: Model Rules, Article 2; QDMTT defined in Article 10.1
6. What about reporting?
Tax calculations, registrations, notifications and information returns are separate questions. The absence of an estimated tax amount does not, by itself, resolve reporting obligations.
Reference: Model Rules, Article 8.1
Glossary
These definitions summarise the Model Rules and later guidance. The official texts prevail.
MNE Group
A group with at least one entity or permanent establishment outside the ultimate parent entity’s jurisdiction. Group membership follows the GloBE consolidation rules, including deemed consolidation and specified exclusions from consolidation; a standalone entity with a foreign permanent establishment may also form an MNE Group.
Constituent Entity
An entity or permanent establishment that forms part of an MNE Group, other than certain excluded entities.
Ultimate Parent Entity (UPE)
An entity that directly or indirectly holds a controlling interest in another entity and is not itself held with a controlling interest by another entity; also the main entity of a standalone cross-border permanent-establishment group under Article 1.2.3.
GloBE income
A Constituent Entity’s financial accounting net income or loss, adjusted as required by the GloBE rules.
Adjusted covered taxes
The taxes on income recorded in the financial accounts, adjusted as required by the GloBE rules, including for certain deferred tax items.
Effective tax rate (ETR)
For a jurisdiction, the adjusted covered taxes of the group’s Constituent Entities there divided by their net GloBE income.
Substance-based income exclusion (SBIE)
An amount based on eligible payroll costs and eligible tangible assets in a jurisdiction, deducted from net GloBE income when calculating excess profit.
Excess profit
Net GloBE income in a jurisdiction less the substance-based income exclusion, with a floor of zero.
Top-up tax
The additional tax needed to bring a jurisdiction’s effective tax rate up to the minimum rate. Broadly, the top-up percentage multiplied by excess profit, subject to further adjustments.
Qualified Domestic Minimum Top-up Tax (QDMTT)
A domestic minimum tax that meets the OECD requirements, allowing a jurisdiction to collect top-up tax on low-taxed profits arising there.
Income Inclusion Rule (IIR)
The rule under which a relevant parent entity pays its allocable share of top-up tax for low-taxed constituent entities in which it holds ownership interests. The inclusion ratio and charging rules, rather than share ownership alone, determine the liability.
Undertaxed Profits Rule (UTPR)
A backstop rule that allocates remaining top-up tax to jurisdictions applying it, generally through a denial of deductions or an equivalent adjustment.
Safe harbour
A simplification that, where its conditions are met, can treat top-up tax for a jurisdiction as zero or reduce the calculations required.
Transitional CbCR safe harbour
A temporary safe harbour for early years that uses country-by-country report data and qualifying financial statements to test whether full calculations are needed for a jurisdiction.
Simplified ETR safe harbour
A safe harbour in the January 2026 package that tests a jurisdiction’s effective tax rate using simplified calculations of income and covered taxes, based largely on financial accounting data. Where the conditions are met, top-up tax for that jurisdiction is deemed zero.
Substance-based Tax Incentive (SBTI) safe harbour
A safe harbour in the January 2026 package that gives more favourable treatment in the effective tax rate calculation to qualifying tax incentives linked to real activity in a jurisdiction, subject to a cap and conditions.
UPE safe harbour
A narrower safe harbour in the January 2026 package that can relieve the Undertaxed Profits Rule for profits in the ultimate parent entity’s own jurisdiction where that jurisdiction’s tax system is recognised as qualifying. It does not cover foreign subsidiaries or remove QDMTTs.
GloBE Information Return (GIR)
A standardised return setting out the group’s GloBE information. It may be filed centrally, with notifications in other jurisdictions.
Side-by-side system
The Side-by-Side system includes an elective Side-by-Side safe harbour for groups whose ultimate parent entity is in a jurisdiction with a recognised qualified regime, and a narrower UPE safe harbour. Their scope and effective dates differ. Neither removes QDMTTs.