Now that the dust has settled on the OECD’s recent update to the Side-by-Side rules, ARKK takes the opportunity to break down what this means for businesses. In this article, we unpack the key changes, explore their practical implications, and outline what organisations need to do next. Drawing on insights from ARKK’s exclusive webinar with BDO, we provide expert perspectives to simplify the complexity and offer actionable takeaways. By reading on, you will gain a clear understanding of the rules, their potential impact on your operations, and the practical steps needed to stay compliant.
The Side-by-Side rules are designed to address one of Pillar Two’s main friction points: its interaction with pre-existing domestic minimum tax regimes.
Under this approach, certain domestic minimum tax regimes are treated as operating alongside Pillar Two.
Where a regime qualifies for a given jurisdiction and year:
Notably, the United States has been included in the OECD’s initial Central Record as having an eligible Side-by-Side regime from 1 January 2026. This provides long-awaited clarity for groups with US operations and reduces the risk of overlapping minimum tax charges.
The emphasis has moved away from refining theory and toward making Pillar Two administrable on an ongoing basis.
Key themes include:
Reduced compliance burdens for low-risk jurisdictions - through increased reliance on safe harbour
Greater flexibility - with safe harbour eligibility assessed on a year-by-year basis
Improved alignment with domestic tax systems - including recognition of domestic minimum taxes and substance-based reliefs
Together, these changes aim to make Pillar Two more practical for MNEs.
While the Side-by-Side system helps reduce duplication and unintended over-taxation, it does not remove complexity. Instead, it shifts where that complexity sits.
Multinationals will need to determine which jurisdictions qualify for Side-by-Side treatment, apply disapplication rules accurately, run Pillar Two calculations alongside QDMTTs and domestic minimum taxes, and maintain clear audit trails explaining how safe harbours were applied.
The focus therefore moves from “Does Pillar Two apply?” to “Which rules apply, where, and in which year?”
ARKK’s Pillar Two platform is designed to support this operational reality by treating Pillar Two as an ongoing compliance process rather than a one-off calculation.
ARKK enables organisations to assess Side-by-Side, Simplified ETR and Transitional CbCR outcomes alongside full GloBE and QDMTT calculations within a single, consistent system. It also supports strong governance, structured workflows and robust audit trails, while remaining adaptable as OECD guidance and local rules evolve.
ARKK works alongside leading advisory and accounting firms, allowing technology and expertise to operate together where required. For example, ARKK recently hosted a webinar with BDO exploring the latest Side-by-Side updates and what they mean for multinational groups preparing for Pillar Two compliance. You can watch the session to gain deeper insight here.
The OECD’s latest Side-by-Side update signals a maturing phase for Pillar Two. As implementation progresses, the framework is becoming more stable, better aligned with domestic tax systems, and increasingly focused on practical administration.
For multinational groups, the priority is shifting from interpreting individual rules to building scalable processes that can adapt as guidance and local implementation continue to evolve.
If you’d like to explore how ARKK can support your Pillar Two compliance journey, get in touch with our team.