The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting approved and published the Consolidated Commentary to the Global Anti-Base Erosion Model Rules (2026) on 11 May 2026. The document consolidates the original Commentary released in March 2022 with all Administrative Guidance agreed by the Inclusive Framework up to January 2026. It runs to more than 440 pages and provides the authoritative interpretive framework for the Global Anti-Base Erosion (GloBE) rules as jurisdictions move into active implementation.
The GloBE rules are the Pillar Two component of the October 2021 two-pillar agreement, in which over 135 Inclusive Framework members representing more than 95 per cent of global GDP agreed to reform international taxation. The rules operate as a coordinated international alternative minimum tax, imposing top-up tax on the income of large multinational enterprise (MNE) groups wherever their jurisdictional effective tax rate (ETR) falls below the agreed minimum rate. The Commentary is intended to promote consistent interpretation across implementing jurisdictions and to give MNE groups predictable outcomes.
The document is excerpted below by chapter. The full document contains substantially more detail, worked examples and annexes than is summarised here.
Scope: who is caught (Chapter 1)
The GloBE rules apply to constituent entities of MNE groups whose consolidated revenues equal or exceed EUR 750 million in at least two of the four fiscal years immediately preceding the tested fiscal year. The threshold mirrors the Country-by-Country Reporting (CbCR) threshold, limiting incremental compliance costs. The two-out-of-four-years test reduces volatility: a group below the threshold in any single year does not automatically fall out of scope.
Revenue for threshold purposes means the inflow of economic benefits from ordinary activities as reported in the consolidated profit and loss statement, including net investment gains, and extraordinary or non-recurring items presented separately. Intercompany revenues eliminated on consolidation are excluded. The revenue of excluded entities is nonetheless counted for threshold purposes.
A group qualifies as an MNE group only if it has at least one entity or permanent establishment (PE) located in a jurisdiction other than the ultimate parent entity (UPE) jurisdiction. Chapter 1 confirms that a standalone entity with a foreign PE also falls within scope. Sovereign wealth funds that meet the definition of a Governmental Entity are not treated as UPEs and do not aggregate otherwise separate MNE groups for threshold purposes.
Excluded entities — governmental entities, international organisations, non-profit organisations, pension funds, and investment funds or real estate investment vehicles that are UPEs — fall outside the charging rules. Entities owned by excluded entities may also qualify for exclusion, subject to an ownership test (at least 95 per cent of value) and an activities test (holding assets, investing funds, or carrying out ancillary functions). A specific bright-line test applies to commercial subsidiaries of non-profit organisations: those subsidiaries are treated as ancillary where the aggregate revenue of all non-excluded group entities is less than EUR 750 million or less than 25 per cent of group revenue.
Charging provisions: the IIR and the UTPR (Chapter 2)
Chapter 2 contains the two interlocking charges. The Income Inclusion Rule (IIR) is the primary mechanism. It requires a parent entity to pay top-up tax equal to its allocable share of the top-up tax of any low-taxed constituent entity (LTCE). The IIR operates on a top-down basis: the UPE jurisdiction applies the IIR first. Where the UPE jurisdiction has not adopted a qualified IIR, the next intermediate parent entity down the ownership chain applies it. Where two or more intermediate parent entities sit in the same ownership chain, the one closest to the top has priority.
Split-ownership structures — where a constituent entity has more than 20 per cent of its ownership interests held by persons outside the MNE group — trigger separate rules for partially-owned parent entities (POPEs). A POPE must apply the IIR to its allocable share of top-up tax regardless of whether the UPE is also applying a qualified IIR. A POPE is turned off only where it is wholly owned (not merely controlled) by another POPE applying a qualified IIR. An offset mechanism in Article 2.3 prevents double taxation where more than one parent entity applies the IIR to the same LTCE.
The Undertaxed Profits Rule (UTPR) acts as a backstop. It applies only where top-up tax has not been brought into charge under a qualified IIR. The UTPR operates by denying deductions (or an equivalent adjustment) to constituent entities located in UTPR jurisdictions in an amount sufficient to generate additional cash tax expense equal to the UTPR top-up tax amount allocated to that jurisdiction. Chapter 2 sets out the formula for calculating that amount and the allocation mechanism across UTPR jurisdictions.
All GloBE calculations must be performed in the presentation currency of the MNE group's consolidated financial statements. Individual jurisdictions may then convert the resulting top-up tax liability into local currency using any reasonable foreign exchange basis, including the average rate for the fiscal year, the rate on the last day of the fiscal year, or the rate on the payment date.
Computing GloBE income or loss (Chapter 3)
The starting point for GloBE income is financial accounting net income or loss as determined for each constituent entity in the preparation of the group's consolidated financial statements. Using an accounting measure reduces compliance costs and provides a uniform cross-jurisdictional base. A series of adjustments is then applied to remove permanent differences between the accounting result and the GloBE tax base.
Adjustments include, among others, the exclusion of dividends and equity gains from the income of shareholders, the exclusion of international shipping income, and specific rules for allocating income between a main entity and its PEs and between a flow-through entity and its owners. Chapter 3 also addresses the treatment of foreign currency gains and losses, stock-based compensation, and various other items.
Adjusted covered taxes (Chapter 4)
Chapter 4 determines the amount of taxes taken into account against GloBE income. The starting point is current taxes for the fiscal year, adjusted for deferred tax accounting principles. The GloBE rules adopt deferred tax accounting to prevent timing differences from creating permanent distortions in the ETR calculation. The approach draws on the tax and accounting information the group already produces, again limiting incremental compliance burden.
Cross-border taxes, including controlled foreign company (CFC) taxes, are allocated to the jurisdiction where the income arises rather than where the tax is levied. Post-filing adjustments and tax rate changes are handled under Article 4.6: decreases in adjusted covered taxes of less than EUR 1 million and increases of less than EUR 1 million are subject to simplified treatment.
Effective tax rate and top-up tax (Chapter 5)
Chapter 5 aggregates the GloBE income and adjusted covered taxes of all constituent entities located in the same jurisdiction to produce a single jurisdictional ETR. Where that ETR falls below the minimum rate, the jurisdiction is a low-tax jurisdiction and top-up tax becomes payable.
Before applying the top-up tax percentage to total GloBE income, a substance-based income exclusion (SBIE) is carved out. The SBIE removes from the top-up tax calculation a routine return on tangible assets and payroll in the jurisdiction. A de minimis exclusion applies where a jurisdiction's aggregate GloBE revenue is less than EUR 10 million and aggregate GloBE income or loss is less than EUR 1 million. Special rules apply to minority-owned constituent entity groups.
Reorganisations and holding structures (Chapter 6)
Chapter 6 addresses corporate restructurings. It sets out how the EUR 750 million revenue threshold applies in the year of a merger or demerger. It provides for the allocation of GloBE income, covered taxes and deferred tax balances between buyer and seller where a constituent entity changes hands during a fiscal year. Specific rules govern joint ventures and multi-parented MNE groups.
Tax neutrality and distribution regimes (Chapter 7)
Chapter 7 deals with situations where an MNE group's structure involves tax-transparent entities, deductible dividend regimes, eligible distribution tax systems, or investment entities. The chapter reduces GloBE income for UPEs that are flow-through entities or subject to deductible dividend regimes where their owners are taxed above the minimum rate. Special ETR computation rules and elections apply to controlled investment entities.
Administration (Chapter 8)
Chapter 8 sets out filing obligations. The relevant constituent entity must file a GloBE Information Return containing the information prescribed under Article 8.1. Chapter 8 also provides the legal basis for safe harbours, which are elaborated in Annex A, and for ongoing Administrative Guidance under Article 8.3.
Transition rules (Chapter 9)
Chapter 9 provides transition rules for groups entering scope. These include rules for taking into account deferred tax assets and losses that arose before the GloBE rules applied, transitional relief for the SBIE, an exclusion from the UTPR for MNE groups in the initial phase of international activity, and transitional relief for filing obligations.
Definitions (Chapter 10)
Chapter 10 contains defined terms used throughout the rules, including definitions of flow-through entities, tax transparent entities, reverse hybrid entities and hybrid entities. Article 10.3 determines the location of an entity or PE for GloBE purposes. Annex B sets out the central record of legislation with transitional qualified status for purposes of the global minimum tax.
Safe harbours (Annex A)
Annex A is substantial. It covers the transitional CbCR safe harbour, which allows groups to use CbCR data to test whether top-up tax is nil for a jurisdiction; the permanent simplified calculations safe harbour framework; the non-material constituent entity (NMCE) simplified calculations; the substance-based tax incentive safe harbour; the simplified ETR safe harbour; the Qualified Domestic Minimum Top-up Tax (QDMTT) safe harbour; the transitional UTPR safe harbour; and the side-by-side system with its associated safe harbour and UPE safe harbour provisions.
Currency thresholds in domestic legislation
The Introduction to the Commentary contains detailed guidance on monetary thresholds. All GloBE monetary thresholds are denominated in euros. Jurisdictions that cannot legislate in euros are advised to rebase their local currency thresholds annually, using the average European Central Bank foreign exchange reference rate for December of the preceding calendar year. Where a jurisdiction's currency is not quoted by the ECB, it should use its own central bank's average December rate. The rebased threshold applies to fiscal years commencing in the following calendar year. Where a group's consolidated financial statements are in a currency other than that used in the domestic threshold, the group must translate the relevant amounts using the same December average rate. The Commentary expressly warns that this translation requirement can produce counter-intuitive results due to exchange rate movements but states that consistent cross-jurisdictional application takes priority.
Why this document matters in practice
The 2026 Consolidated Commentary is the single reference document that practitioners, in-house teams and tax authorities must use when interpreting and applying the GloBE rules. Its significance lies in three areas.
First, it integrates four years of Administrative Guidance into a single coherent text. Previously, advisers and in-house teams needed to read the original March 2022 Commentary alongside multiple separate guidance documents issued by the Inclusive Framework. The 2026 document ends that complexity.
Second, it addresses real-world implementation issues that were not fully resolved at the time the model rules were finalised. The detailed treatment of sovereign wealth funds, the bright-line test for non-profit subsidiaries, the split-ownership rules for POPEs, the currency translation methodology and the operation of the QDMTT safe harbour all reflect experience gained as jurisdictions legislated in 2023 and 2024.
Third, consistency of interpretation across jurisdictions is essential to the rule order working correctly. The IIR and UTPR interlock in ways that depend on each jurisdiction recognising the other's qualified rule. Groups can face double taxation or unexpected UTPR exposure where domestic implementations diverge from the model. The Consolidated Commentary provides the interpretive baseline against which qualification assessments are made under the GloBE Implementation Framework.
The full document, which contains considerably more detail, worked examples and annexes than is covered here, is available to download from the OECD.