In this episode, Matt Andrew and Ruairi Lamb discuss the Substance‑Based Tax Incentive Safe Harbour and its role within the Pillar 2 global minimum tax framework. The conversation explores how the safe harbour is designed to preserve certain qualified tax incentives that are demonstrably linked to real economic activity, while also highlighting the practical implications for multinational groups and policymakers navigating the evolving Pillar 2 landscape.

Key topics covered include:

• How the Substance‑Based Tax Incentive Safe Harbour under Pillar Two aims to prevent GloBE top‑up tax from neutralising qualifying tax incentives.
• The key criteria for incentives to qualify—general availability and a clear link to local economic substance such as payroll and tangible assets.
• Treatment of refundable and transferable tax credits, including elective approaches and substance‑based caps.
• Implications for multinationals and governments, particularly for investment decisions, effective tax rate modelling, and asset‑intensive versus IP‑light business models

• (00:00:00) - Understanding the Substance Based Tax Incentive Safe Harbour

In this episode, Jordan Gill, International Tax Director, discusses what the extension to the pre-existing Transitional CbCR Safe Harbours means to Multinational Groups and what benefits this may have in providing technical and practical simplifications.

In this episode of the podcast series, Ed Raza, Senior Director, explains the key features of the Simplified Effective Tax Rate (ETR) Safe Harbor from the OECD’s SbS Package. The discussion highlights how the new Safe Harbor, expected to apply from 2027, is designed to ease Pillar Two compliance and emphasizes the importance of early preparation and robust tax and financial reporting processes ahead of implementation.