The OECD Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS) has recently published the Side-by-Side (SbS) Package on the Global Anti-Base Erosion Model Rules (GloBE Rules). The SbS package introduces four new safe harbours aimed at material simplification, including certain substance-based tax incentives and establishment of a new SbS system. The new safe harbours include the permanent simplified effective tax rate (ETR) safe harbour, Substance-Based Tax Incentives (SBTI) Safe Harbour, the SbS Safe Harbour and the Ultimate Parent Entity (UPE) Safe Harbour. The SbS package also provides an extension of the transitional CbCR safe harbour (TSH) by one year. The details of the new safe harbours introduced are covered in our tax alert[1].

Although the SbS package reflects a political consensus at the OECD level, it has been issued as administrative guidance and does not itself constitute law unless and until jurisdictions incorporate it into local legislation. As a result, implementation timelines may vary across jurisdictions, with most countries requiring formal legislative action to give effect to the administrative guidance, which may lead to differences in enactment timing across jurisdictions. Nevertheless, all the newly agreed safe harbours are intended to take effect from January 1, 2026, with the Simplified ETR Safe Harbour fully mandatory only for fiscal years beginning on or after December 31, 2026 (FY 2027), and optional early adoption in certain cases from FY 2026.

Material Simplifications: Overlap of the Simplified ETR Safe Harbour and TSH for FY26 and FY27

Under the SbS package, both the simplified ETR safe harbour and the TSH may be available to in-scope multinational enterprise (MNE) groups for FY 26 and FY 27, subject to meeting their respective eligibility conditions. A jurisdiction that may have failed to qualify for the TSH in an earlier year is not automatically precluded from qualifying for the Simplified ETR Safe Harbour in subsequent years.

The TSH is subject to a “once out, always out” rule i.e., if a jurisdiction that fails the TSH in one year, it cannot apply TSH in a subsequent year, however, the Simplified ETR safe harbour allows MNE groups to re-enter the safe harbour in subsequent years, provided the eligibility conditions are met.

The TSH continues to apply a 17% jurisdictional ETR threshold for FY 26 and FY 27, following its one-year extension under the SBS package. Whereas, the simplified ETR safe harbour applies a 15% jurisdictional ETR test, aligned with the global minimum tax rate under GloBE Rules. Accordingly, for FY 26 and FY 27, MNE groups will need to evaluate on a jurisdiction-by-jurisdiction and year-by-year basis, which safe harbour is more beneficial in a given year, particularly given the different ETR thresholds (17% for TSH vs. 15% for simplified ETR safe harbour). The assessment will involve not only comparison of applicable ETR thresholds but also consideration of data availability, computational complexity and systems readiness in each jurisdiction.

Note: Re-entry into the Simplified ETR Safe Harbour requires that the MNE Group had no Top-up Tax liability in the Tested Jurisdiction in each fiscal year beginning within the preceding 24 months (i.e., the prior two fiscal years).

Tax Incentives: Capital Expenditure Focus Creates Challenges for Certain Sectors

The SbS package’s Substance-Based Tax Incentive Safe Harbour (SBTI) introduces rules for Qualified Tax Incentives (QTIs) that allow certain tax incentives to reduce Pillar Two Top-up Tax, subject to specified limits.

QTIs under SBTI safe harbour provide capital expenditure incurred, or volume of tangible goods produced as the qualifying base for QTIs raising concerns that incentives may primarily benefit manufacturing and other asset intensive industries.

The service-oriented sectors, such as financial services and treasury services, may face structural challenges in aligning existing incentive models with the QTI framework as economic substance is typically reflected through regulatory capital and skilled personnel, rather than through tangible capital investment. As a result, incentives traditionally offered to financial services sectors may not qualify for the SBTI safe harbour that places emphasis on capital expenditure, potentially limiting the effectiveness of QTIs for these sectors.

Similar considerations arise in the context of intellectual property (IP) structures. While incentives directly linked to research and development (R&D) activity are more likely to meet the qualifying criteria, regimes focused on IP ownership and exploitation may face challenges in meeting QTI requirements.

In addition, the IF has introduced flexibility in the treatment of refundable or transferable tax credits under Pillar Two. Notably, certain Qualified Refundable Tax Credits (QRTCs) and Marketable Transferable Tax Credits (MTTCs) can be elected to be treated (in whole or in part) as QTIs for purposes of the SBTI Safe Harbour, provided they meet the QTI definition. If an MNE group makes this election, the credits are excluded from GloBE income and treated as a reduction to covered taxes, before the QTI adjustment to increase covered taxes (subject to the Substance Cap limitation), just like any other type of QTIs.

It remains to be seen how the incentive landscape will evolve and whether jurisdictions will redesign or offer new incentives aligned with Pillar Two framework. As a result, ongoing monitoring and ETR modelling to forecast the potential impact of proposed changes under QTI will be critical for MNEs as they navigate incentive planning and investment decisions.

Qualified SbS and UPE Regimes: Scope and Practical Considerations

The SbS package establishes two new safe harbours tied to the tax regime of the MNE group’s headquarter jurisdiction. An SbS safe harbour for MNE groups with a UPE in a jurisdiction that has a qualified SbS regime (i.e., eligible domestic and worldwide tax system) and a UPE safe harbour for MNE groups with UPE in a jurisdiction that has a qualified UPE regime (i.e., an eligible domestic tax system only). Both safe harbours are elective: importantly, they depend on the IF formally confirming a jurisdiction’s regime as qualified upon request and peer review.

When an MNE group elects the SbS safe harbour (in a jurisdiction with a Qualified SbS regime), it switches off the application of both the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) across the MNE Group, whereas the UPE safe harbour switches off the UTPR only for the UPE jurisdiction. Qualified Domestic Minimum Top-up Taxes (QDMTTs) will continue to apply in all jurisdictions where implemented, regardless of SBS or UPE safe harbour election.

At present, the United States (US) is the only jurisdiction confirmed as having a qualified SBS regime. The SbS safe harbour does not apply to MNE groups that are not headquartered in the US, even where such groups have US intermediate parent entities holding foreign subsidiaries. Other jurisdictions with broad and comprehensive controlled foreign company (CFC) rules, such as Brazil, could potentially explore qualification, however, the timing and review process of any such applications remain uncertain.

In relation to the qualified UPE regime, no jurisdiction has been recognized yet. It, therefore, remains an open question whether jurisdictions with pre-existing domestic tax systems such as India may seek to apply for recognition under qualified UPE regime and how the IF will assess such regimes in practice.

As jurisdictions evaluate whether to pursue qualification and the IF undertakes its review process, MNE groups will need to closely monitor developments and assess potential impact on their Pillar Two profile. While these safe harbours may reduce the scope and compliance burden for some MNE Groups, they do not eliminate the obligation to file a GloBE Information Return (GIR) appropriately reflecting the elections made under these safe harbours and other Pillar Two obligations, including QDMTTs.

SbS Package Impact on Near Term Pillar Two Compliance and Reporting

The introduction of the SbS package does not change Pillar Two compliance obligations for fiscal years (FY) 2024 and FY 2025. MNE Groups should continue to comply with near term compliance obligations, including registration, notifications, GloBE Information Return (GIR) filings. The application of existing IIR, UTPR (where applicable), and QDMTT rules continue to apply based on currently enacted legislation. The relief under the SbS package, will only apply from FY 2026 onwards, subject to meeting the conditions and enactment by local jurisdictions.

USA

December 01, 2025: New IRS Math Error Rules[2]

The Internal Revenue Service Math and Taxpayer Help Act (H.R. 998), signed on December 1, 2025, requires IRS math error notices to include detailed calculations and a clear 60-day abatement deadline.

The IRS must now explain the reasoning for errors, show numerical changes, and highlight the 60-day window; otherwise, adjustments become final.

December 15, 2025: USA Finalizes Regulations Clarifying Tax Exemption for Foreign Government Investments[3]

Treasury and the IRS issued final and temporary regulations clarifying when income from US investments of foreign governments, including sovereign wealth funds, foreign government pension funds, and certain international organizations is exempt from US taxation. Income is generally exempt if not derived from commercial activity or a controlled commercial entity (CCE). Separately, proposed rules would treat the acquisition of debt as a commercial activity unless certain conditions are met and would broadly define when a foreign government effectively controls a CCE, potentially triggering US tax on certain investments.

Cyprus

December 22, 2025: Parliament Approves Comprehensive Tax Reform Package[4]

The House of Representatives approved the Tax Reform package on December 22, 2025, introducing major changes aimed at creating a fairer and more growth‑oriented tax system that supports households and businesses. The reform increases the tax‑free income threshold to €22,000, with additional family‑based exemptions that can exceed €10,000 for families with children, covering expenses such as housing costs, education, and green investments. For businesses, the deemed distribution system is abolished and the tax rate on real dividends is reduced from 17% to 5%, improving liquidity and competitiveness.

Denmark

December 11, 2025: Denmark Passes 2026 Budget[5]

Denmark’s Parliament has enacted the Finance Act 2026. Key elements include plans to allow immediate deduction of payroll costs for software development in-house (up to DKK 5 million annually), the gradual abolition of excise duties on coffee, chocolate, and confectionery, and elimination of VAT on books including print, e-books, and audiobooks through a separate bill. The Act takes effect on January 01, 2026.

France

December 26, 2025: Amended Finance Bill Adopted[6]

The French Senate has passed the first reading of the 2026 Finance Bill with amendments tightening the proposed tax on personal holding companies, replacing the real estate wealth tax with a higher‑threshold “contribution on high wealth,” rejecting both a temporary corporate tax surcharge for large firms and proposed VAT threshold reductions and lowering the pension income tax allowance cap.

December 24, 2025: France Sets Out DAC8 Reporting Rules for Crypto-Asset Activities[7]

France has issued a decree detailing how crypto‑asset service providers must identify users, report transactions, and register with the tax authorities under the country’s implementation of the EU’s DAC8 rules. The decree defines the types of crypto assets, entities, and partner states covered, requires operators to file electronic DAC8 reports by June 15, each year and register by April 15, when they fall within scope, and applies to transactions conducted from January 01, 2026 (reportable in 2027). A second decree published the same day introduces corresponding due‑diligence and reporting requirements for financial institutions under the updated Common Reporting Standard.

Germany

December 29, 2025: Germany Finalizes and Enforces GloBE Information Return Framework[8]

The regulation implementing Germany’s minimum taxation law was published in the official Gazette on December 29, 2025, and took effect on December 30, 2025. The regulation provides procedural and reporting rules for filing the GloBE Information Return under the Pillar Two.

Hungary

December 16, 2025: Hungary Ratifies the GIR MCAA Enabling Automatic Exchange of GloBE Information under BEPS Pillar Two[9]

Hungary has ratified MCAA for the exchange of GloBE information under Pillar Two of the OECD/G20 Inclusive Framework. The law (No. XC of 2025) and the list of participating jurisdictions were published in the official Gazette on December 16, 2025.

Ireland

December 05, 2025: Department of Finance and Revenue launch eWHT public consultation [10]

Ireland’s Department of Finance and Revenue have opened a joint public consultation on plans to modernize Professional Services Withholding Tax and Relevant Contracts Tax, extend withholding tax rules to the platform economy, and introduce personalized deduction rates for self‑employed workers. The consultation, which runs until January 30, 2026, is supported through Revenue’s eWHT Consultation Hub, where affected groups, including professional service providers, construction‑related contractors and subcontractors, platform operators, and platform workers, can access detailed information and submit feedback through online forms.      

December 08, 2025: Stamp Duty - Market capitalization exemption [11]

Finance Bill 2025 introduces a new stamp duty exemption for acquisitions of stocks and marketable securities issued by companies with a market capitalization below €1 billion, provided the securities are traded on an EU‑regulated or equivalent market and a valid market‑capitalization notification is submitted to Revenue within the required timeframe. The exemption also applies to newly listed entities if their expected market value at admission is under €1 billion, and it will operate from 1 January 2026 to 31 December 2030. Revenue has published an overview outlining the conditions and notification process, with full guidance to follow once the legislation is enacted.

Lithuania

December 10, 2025: Lithuania Issues Rules for DAC8[12]

Lithuania has issued rules outlining procedures for collecting, verifying, and reporting data on crypto-asset users, aligning with the European Union’s Amending Directive on Administrative Cooperation (DAC8) (Directive 2023/2226). The rules, effective from January 01, 2026, define obligations for reportable crypto-asset service providers, including registration requirements, due diligence standards, and reporting deadlines.

Luxembourg

December 17, 2025: Luxembourg Approves 2026 Budget[13]

The Chamber of Deputies approved the 2026 Budget at first reading, which advances plans for a single tax class system. Key measures include a new tax credit to boost investment in innovative startups, updates to tax treatment of carried interest, and targeted support for agriculture, wine growing, and craft sector. The government remains focused on implementing Pillar Two’s global minimum tax rules.

Netherlands

December 15, 2025: Tax Authority Clarifies Pillar Two Rules for Transfers of Low-Taxed Entities[14]

The Administration has issued guidance explaining how to calculate the income inclusion Top‑up Tax when a Netherlands parent company transfers a low‑taxed group entity to a foreign parent within the same group during the year. Top‑up tax applies whenever a parent holds an interest in a low‑taxed entity at any point in the fiscal year. External transfers do not require pro‑rata calculations because consolidated accounts already capture the timing, but for internal transfers the top‑up tax must be allocated on a pro‑rata basis according to the period each parent entity holds the interest, ensuring correct attribution and preventing double taxation.

December 23, 2025: Netherlands Enacts Key Amendments to Minimum Tax Act and Advances DAC9 Implementation Bill[15]

Netherlands has finalized the updates to the Minimum Tax Act and passed the bill implementing the European Union’s (EU) DAC9 Directive. Key changes to the Minimum Tax Act include updating the definition of flow-through and hybrid entities for Pillar Two purposes, excluding pre-transition deferred tax assets from Effective Tax Rate calculations, and adding anti-avoidance measures addressing hybrid intra-group payments under the transitional Country-by-Country-Reporting safe harbour.

Norway

December 22, 2025: Norway Updates Pillar Two Rules to Align with OECD Guidance[16]

Norway has updated its global minimum tax legislation to better align the Supplementary Tax Act with international guidance issued under Pillar Two framework. The amendments do not change the structure of regime, but they clarify the treatment of deferred taxes, the five‑year recapture rule for deferred tax liabilities, profit allocation involving flow‑through entities, and how taxes paid by hybrid or reverse‑hybrid entities are handled. The legislation also confirms that, where a securitization entity is already subject to a qualified domestic minimum Top‑up Tax, any remaining Top‑up Tax must be charged to another Norwegian group entity.

Russia

December 23, 2025: Clarification on Income Thresholds for the Patent Fee Regime[17]

The Federal Tax Service clarified the income cap for eligibility for patent fee regime: RUB 20 million in 2026, RUB 15 million in 2027, and RUB 10 million thereafter. As a result, the taxpayer loses the right to apply for a patent from 2026 if, for 2025 or during 2026, his income exceeded RUB 20 million.

Sweden

December 10, 2025: Sweden Revises Pillar Two Framework[18]

Sweden has published changes to its domestic Pillar Two legislation to align with the latest administrative guidance issued by the OECD/G20 Inclusive Framework. The changes refine the allocation of income and taxes across cross-border structures, including permanent establishments, controlled foreign companies, and flow-through and hybrid entities. The revisions also update the deferred tax calculations to use Top-up Tax values where they differ from accounting figures.

United Kingdom

December 12, 2025: UK’s HMRC Updates Capital Gains Manual[19]

His Majesty’s Revenue & Customs (HMRC) has updated its Capital Gains Manual to reflect anti‑avoidance changes announced in the 2025 Budget, with new guidance effective from November 26, 2025. The updates include an appendix explaining how the revised anti‑avoidance rules apply to share exchanges and company reconstructions, detailed guidance on how corporate reorganization provisions operate in complex international mergers, and clarification that sections 135 and 136 of the Taxation of Chargeable Gains Act, 1992 can apply if all statutory conditions are met. HMRC also outlines how the amended anti‑avoidance rules in section 137 interact with these provisions, particularly where transactions involve multiple steps or pending statutory clearances.

Türkiye

December 24, 2025: Türkiye Announces Staged Reduction of Digital Services Tax Rate[20]

Presidential Decision No. 10767 reduces the digital-services tax (DST) rate from 7.5% to 5% with effect January 01, 2026, and further to 2.5% from January 01, 2027. The Decision entered into force on December 25, 2025, and applicable to revenue arising on or after January 01, 2026.

December 26, 2025: Ministry Issues Framework for Minimum Top-Up Tax[21]

Türkiye has issued a detailed Communiqué finalising the rules for implementing its Domestic and Global Minimum Top‑Up Corporate Tax, which took effect on December 26, 2025. The regime applies to multinational enterprise groups with at least EUR 750 million in consolidated annual revenue in at least two of the previous four fiscal years and ensures that profits in Türkiye are taxed at a minimum effective rate of 15%. The Communiqué sets filing and payment deadlines for the top‑up tax and confirms joint and several liability for all Türkiye‑based entities. It also introduces transitional reliefs, including a de minimis exclusion for jurisdictions with revenues below EUR 10 million and profits below EUR 1 million, simplified effective tax rate thresholds of 15 percent for 2024, 16 percent for 2025 and 17 percent for 2026, and a routine profits test based on substance‑based income exclusion. These transitional measures apply to accounting periods beginning on or before December 31, 2025 and ending no later than December 31, 2026.

China

December 01, 2025: China’s STA Revises Public Disclosure of Tax Arrears[22]

The State Taxation Administration (STA) has issued Order, effective March 01, 2026, updating the rules for public disclosure of tax arrears. Under the Order, taxpayers in default will be publicly listed monthly on the STA’s information platform, tax offices, media, or other channels, with provincial-level authorities authorized to disclose arrears and provide inquiry services online depending on case severity. Disclosed information will include the taxpayer’s name, identification number, business location, tax and late-payment amounts, default date, and the announcing authority. The provisions also apply to withholding agents and guarantors. Before publication, taxpayers will receive their details and must confirm or object within three working days if there are inaccuracies. Disclosure may be exempted in cases of bankruptcy, dissolution, reorganization, or where state secrets are involved.

December 30, 2025: China Enacts Detailed Rules for New VAT Regime Effective 2026[23]

China has enacted the Implementation Regulations (IR) of the Value Added Tax Law, effective January 01, 2026, alongside the new VAT Law. The regulations entail detailed clarification on application of nationwide new VAT system. The IR specify that services or intangibles provided by overseas entities to Chinese customers, or connected with goods or property in China, are deemed to be supplied and consumed in China and are therefore subject to VAT. Zero-rated benefit on export of services such as R&D, design, software, and international transport services apply only when fully consumed abroad. The IR also refines input tax rules, allowing full credit for mixed-use assets with an original cost of less than CNY 5 million while requiring annual adjustments for higher-value assets. Meanwhile, input VAT on loan-related interest, advisory, and administration fees remains non-creditable.

Hong Kong

December 09, 2025: Hong Kong Launches Consultation on OECD Crypto-Asset Reporting Framework and CRS Amendments[24]

Hong Kong has launched a public consultation on implementing the OECD’s new Crypto‑Asset Reporting Framework and updated Common Reporting Standard (CRS), aiming to strengthen tax transparency and align with international standards. The Government plans to amend the Inland Revenue Ordinance to enable automatic exchange of crypto‑asset tax information from 2028 and implement the revised CRS from 2029, while also proposing mandatory registration for financial institutions, higher penalties and enhanced enforcement to maintain compliance with OECD peer‑review expectations and uphold Hong Kong’s status as a global financial centre. Public feedback is invited on consultation paper until February 06, 2026.

India

December 09, 2025: Physical Presence Required for Service PE under India–Singapore Treaty, Delhi High Court Clarifies[25]

The Delhi High Court held that Clifford Chance Pte Ltd did not have a service PE or virtual service PE in India under Article 5 of the India–Singapore tax treaty, as its employees were physically present in India for only 44 days, well below the 90‑day threshold, and no employees were present the following year. The Court also ruled that a “virtual PE” cannot be inferred without an explicit treaty amendment, emphasising that PE provisions must be interpreted strictly and cannot be expanded based on evolving international concepts or OECD commentary.

South Korea

December 05, 2025: National Assembly Approves Tax Reforms, Modifies Dividend Taxation[26]

The National Assembly approved the 2025 tax amendment bills on December 02, 2025, including revisions to the proposed separate tax treatment of dividend income. The initially proposed top dividend tax rate of 35% was replaced with a progressive structure, with rates ranging from 14% to 30% depending on the level of dividend income, and the highest rate applying only to amounts above KRW 5 billion. These revised dividend tax brackets will apply to dividends distributed on or after January 01, 2026.

December 18, 2025: South Korea Publishes Revised Guidance on Treaty MAP Requests[27]

Korea has released guidelines for requesting Mutual Agreement Procedure (MAP) assistance under its tax treaties. The document explains how taxpayers can apply for MAP, outlines eligibility and filing deadlines, and describes how cases are being conducted and implemented, including standard forms and notices.

Malaysia

December 09, 2025: Malaysia Issues Revised Public Ruling on Construction Contract[28]

The Inland Revenue Board’s (IRB) Public Ruling 5/2025, released on December 09, 2025, clarifies how gross income from construction contracts should be determined, including rules on revising profit estimates, restricting the offset of estimated losses, and recognizing actual profit or loss when final accounts are completed or after 12 months from contract completion. It also confirms how adjusted losses may be carried forward and expands the documentation required for audit, ensuring greater accuracy and compliance in the tax treatment of construction contract businesses.

December 15, 2025: Malaysia Releases New E-Invoicing Compliance Review Framework[29]

IRB has issued an e-Invoicing Compliance Review Framework to strengthen compliance. Reviews may cover up to two years of assessment and include business interviews and on-site or agreed-location checks of e-invoicing records. The framework applies under the Income Tax Act 1967 and the Petroleum (Income Tax) Act 1967. While reviews are capped at two years, offences may be prosecuted up to 12 years from occurrence. Cases are selected based on risk and system-driven analysis. Taxpayers may make voluntary disclosures before or after filing, but only complete and accurate disclosures qualify.

December 22, 2025: Malaysia Clarifies Tax Rules for Micro, Small, and Medium Companies[30]

The IRB’s new Public Ruling 8/2025 outlines the criteria and tax treatment for micro, small, and medium‑sized companies (including LLPs) under the Income Tax Act 1967, aligning SME definitions across sectors and setting eligibility conditions for preferential CIT rates. It also highlights available incentives such as small‑value asset allowances, exemptions from estimated tax submissions, and ESG‑related tax deductions, while noting restrictions for entities with significant foreign ownership and certain excluded structures.

December 31, 2025: Malaysia Enacts Finance Act 2025 and Enforcement Framework[31]

The bills for enactment of Finance Act, 2025 and the Measures for the Collection, Administration and Enforcement of Tax Act, 2025 were officially published in the Gazette on December 31, 2025.

Please refer to the November edition of A&M’s Tax Policy Insights Newsletter for details of the provisions.[32]

Singapore

December 12, 2025: Denmark-Singapore Agreement on Automatic Exchange of Information Terminated[33]

Denmark issued an Executive Order on December 08, 2025, terminating the Denmark – Singapore Competent Authority Agreement on Automatic Exchange of Information (2017), following a notification received from Singapore dated December 30, 2024. The Order takes effect from January 01, 2026.

Thailand

December 30, 2025: Cabinet Approves Draft Secondary Legislation on Top-Up Tax Under the Emergency Decree[34]

The Cabinet in principle approved four draft secondary instruments to operationalize Thailand’s top-up tax framework: (1) a royal decree establishes scope criteria for MNE groups following corporate restructurings; (2) a royal decree listing entities to be excluded from corporate-group; (3) a ministerial regulation on allocation of Top-up Tax where no Thai group entity has GLoBE income; and (4) a ministerial regulation prescribing adjustments to income, expenses and covered taxes and the methodology for computing the domestic top-up tax.

Israel

December 22, 2025: Israel Plans Five-Year 15% Levy on Banks’ Excess Profits from 2026[35]

Israel’s Ministry of Finance has proposed a five-year 15% surcharge on banks’ excess profits, defined as profits exceeding the 2018–2022 average by more than 50%. The measure, set to begin in 2026 pending Knesset approval, till 2030.

December 29, 2025: Israel Finalizes Domestic Minimum Tax for Global Enterprises[36]

The Parliament of Israel has approved legislation introducing a Qualified Domestic Minimum Top-Up Tax (QDMTT), effective from January 01, 2026, to ensure that large multinational groups are taxed in Israel at a minimum effective rate of 15%, consistent with the OECD Pillar Two framework. The law applies to Israeli entities of groups with consolidated revenues above EUR 750 million in at least two of the four preceding years. It outlines calculation rules aligned with the OECD GloBE Model, allowing an Israeli entity to pay its share of the group’s top-up tax attributable to Israeli operations. The law requires in-scope entities to file a top-up tax report within 15 months of the tax year-end and notify the tax authority within 90 days of first becoming subject to QDMTT.

Kingdom of Saudi Arabia

December 25, 2025: ZATCA Releases Guidance on Taxation of Technical and Consulting Fees Under Saudi Tax Law[37]

The Zakat, Tax and Customs Authority issued an explanatory bulletin outlining the tax treatment of technical and consultancy services provided by non‑residents. Payments to non‑residents for such services are subject to 5% withholding tax, unless conducted through a permanent establishment in Saudi Arabia. The guidance draws clear distinction between such services and the transfer of know‑how, which is treated as a royalty and subject to 15% withholding tax. It explains that tax treaties may modify domestic tax rules. Where no specific treaty provision exists, payments for technical and consultancy services would generally be taxable in Saudi Arabia only when there is a permanent establishment.

UAE

December 30, 2025: UAE Rolls Out APA Framework Under Corporate Tax Regime[38]

The Federal Tax Authority (FTA) has launched an Advance Pricing Agreement (APA) programme under the UAE corporate tax regime.

Please refer to A&M’s Tax Alert for a detailed analysis.[39]

Bahrain

December 01, 2025: Bahrain Revises Guidelines on Domestic Minimum Top-Up Tax[40]

The Bahraini National Bureau for Revenue has issued revised guidance on the Domestic Minimum Top-Up Tax (DMTT), expanding the registration provisions to cover newly established entities and clarifying the methodology for calculating the 120‑day registration period. The original guidance also reinforces key components of the DMTT framework, including the definitions of Multinational Enterprise groups, the computation of the EUR 750 million revenue threshold, applicable exclusions and safe harbours, etc. Under the revised framework, new entities are required to complete registration within 120 days from the start of their fiscal year, with the timeline commencing once they obtain “Active with License” status in the Commercial Register.

December 29, 2025: Bahrain Introduces Corporate Profit Tax Under New Fiscal Reform Package[41]

Bahrain’s Cabinet has approved a fiscal reform package aimed at strengthening public finances and widening revenue sources. A key reform is the draft Corporate Profit Tax Law, introducing a 10% tax on profits of local companies with annual revenues above BHD one million or net profits exceeding BHD 200,000, applicable only to profits above that threshold and targeted for implementation in 2027 following legislative approval.

Australia

December 08, 2025: Australia Publishes Guidance on Exemptions from Public Country-by-Country Reporting[42]

The Australian Taxation Office (ATO) has released Practice Statement PS LA 2025/2, explaining how multinational enterprises can apply for exemptions from Australia’s public country-by-country reporting regime, effective for income years starting July 01, 2024. Exemptions may be granted for legal restrictions, commercial sensitivity, or excessive compliance burden, but require strong supporting evidence.

December 10, 2025: Australian Tax Authority Publishes Draft Changes to Inbound Distribution Transfer Pricing Guideline[43]

On December 10, 2025, the Government released a draft revision to its 2019 guidance on transfer pricing for inbound distribution arrangements, refining its scope and introducing a new “white zone” category for the lowest-risk cases. The revised draft guidelines narrow the definition of inbound distributors to business-to-business intermediaries dealing in goods or digital products where key intellectual property is owned by related foreign entities, while insurance and financial activities remain excluded. Arrangements qualify for the “white zone” if supported by a recent Advance Pricing Agreement (APA), settlement agreement with ATO, court or tribunal decision, or an ATO review with a low-risk or high-assurance outcome, provided no material changes affect comparability or pricing. Feedback on the draft guidelines is invited until February 13, 2026.

December 17, 2025: Australia Formalizes Crypto Reporting under OECD’s CARF Initiative[44]

Australia has adopted the OECD’s Crypto-Asset Reporting Framework in its 2025 – 2026 Mid-Year Economic and Fiscal Outlook. Under the new regime, crypto-asset service providers must report to ATO information on holdings and transactions of foreign tax residents and entities with foreign control. Domestic reporting will begin in 2027, with the first international exchanges slated for 2028.

New Zealand

December 04, 2025: New Zealand Proposes Tax Reforms for Shareholder Borrowing[45]

On December 04, 2025, Inland Revenue released a consultation paper proposing significant changes to the tax treatment of shareholder loans. The proposal includes - (a) treating loans over NZD 50,000 that remain unpaid for 12 months after the income year in which they were made, as taxable dividends; (b) taxing any outstanding shareholder loans when a company is deregistered; (c) requiring companies to maintain memorandum accounts to track capital for tax-free distribution on winding-up. If enacted, the rules would apply retrospectively from December 04, 2025, with public submissions due by February 05, 2026.

• The United States has agreed to exempt UK-origin pharmaceuticals, active ingredients, and medical technology from section 232 tariffs and to pause new section 301 actions on UK drug pricing for the rest of President Trump’s term, as part of a broader US–UK Economic Prosperity Deal announced on December 01, 2025. In return, the UK will implement significant pricing reforms, including a 25% increase in NHS net prices for new medicines and cutting Voluntary Scheme for Branded Medicines Pricing, Access and Growth repayment rates to 15% from 2026.[46]
• The Council has adopted negotiating mandates for two regulations implementing the tariff elements of the EU‑US Joint Statement, aimed at restoring stability in transatlantic trade. The first regulation removes remaining EU customs duties on US industrial goods and grants preferential access, including tariff‑rate quotas, for selected seafood and agricultural products, while introducing stronger safeguards, monitoring obligations, and clarified rules of origin. The second regulation continues the suspension of duties on live, frozen, and now processed lobster imports from the US. With these mandates approved, the Council can now begin trilogue negotiations with the European Parliament to finalize both regulations.[47]
• India and New Zealand have concluded negotiations on a free trade agreement (FTA) on December 22, 2025, eliminating duty on 100% of Indian exports aimed at deepening economic ties.[48]
• The United States has imposed a 15% tariff cap on imports from Switzerland effective retroactively from November 14, 2025. In return, Switzerland will lower import duties on selected fish and agricultural products originating from the U.S. This arrangement is based on the joint statement issued by Switzerland, Liechtenstein, and the United States.[49],[50]
• The United States has initiated Section 301 tariffs on China’s semiconductor sector from December 23, 2025, at a 0% rate and will be enhanced on June 23, 2027, with the final rate announced 30 days in advance.[51]