Finland submitted a law proposal on 12 February 2026 incorporating the OECD's Side-by-Side Package into its minimum tax legislation. The proposal introduces presumption rules for parallel tax systems and tax incentives that will reshape how the 15% global minimum tax applies to multinational groups, with implementation targeted for 31 March 2026.
Finland’s government submitted a new law proposal (HE 6/2026) to parliament on 12 February 2026, which supplements the earlier proposal HE 196/2025, introducing further amendments to the Law on Minimum Tax by Large Groups, which implements the Pillar 2 global minimum tax rules.
Finland proposes amending its Minimum Tax for Large Groups Act to incorporate new presumption rules regarding parallel tax systems, ultimate parent entities, and tax incentives based on net assets. The amendment would also extend the transitional presumption rule for country-by-country tax reporting by one year.
The changes are based on the EU Minimum Tax Directive (Article 32) and the OECD/G20 Inclusive Framework’s parallel model package published in January 2026. While these presumption provisions are expected to significantly impact the global minimum tax system, Finland anticipates mainly indirect effects with minimal reduction in supplementary tax collected domestically.
The parallel system
The Side-by-Side System creates an alternative pathway for certain multinational groups already subject to comparable domestic minimum tax regimes. Groups with ultimate parent entities located in qualifying parallel jurisdictions may be excluded from standard minimum tax calculations, provided they meet strict requirements verified through OECD peer review. This system does not exempt entities in jurisdictions that apply domestic supplementary tax, so Finnish entities remain subject to taxation.
For Finland, the direct fiscal impact is expected to be minimal since the country applies a domestic supplementary tax. However, indirect effects on competitiveness could arise if parallel model groups face lighter overall tax burdens. The regulation includes safeguards requiring qualifying parallel systems to maintain tax levels at or above the 15% minimum standard, reducing risks to the minimum tax objectives.
On 5 January 2026, the OECD and G20 Inclusive Framework published the Side-by-Side Package, a comprehensive update to the global minimum tax framework. All 147 member jurisdictions, including EU Member States (except Cyprus, which later expressed support independently), endorsed this agreement. The package introduces several presumption rules designed to simplify compliance and address situations where countries have implemented alternative systems that achieve similar minimum taxation objectives.
The package contains guidance on five main elements: the Side-by-Side System (parallel model), the Ultimate Parent Entity Safe Harbour, the Substance-based Tax Incentive Safe Harbour, the Extension of the Transitional Country-by-Country Reporting Safe Harbour, and the Simplified Effective Tax Rate Safe Harbour. These provisions are intended to apply primarily to financial periods beginning on 1 January 2026, with implementation expected no later than 31 March 2026.
Tax incentive provisions
The substance-based tax incentive presumption rule represents the most significant change to global effective tax rates. This provision allows certain tax incentives—such as Finland’s clean transition investment credits and research and development deductions—to be applied while still achieving the 15% effective tax rate threshold. The rule includes substance limitations to prevent excessive tax competition and ensure the global minimum tax remains effective.
In Finland, existing substance deductions for tangible assets and personnel expenses already reduce supplementary tax liability for many groups. Therefore, the new presumption rule is not expected to significantly decrease Finland’s domestic supplementary tax collection beyond current levels. National tax incentives that reduce effective tax rates will primarily affect domestic supplementary taxes rather than income inclusion or undertaxed profits rules applied across borders.
Assessment challenges
Evaluating the actual impact of these changes is constrained by significant limitations. The first minimum tax returns will be filed in 2026, covering the 2024 financial year, so no real supplementary tax data currently exists for comparison. This absence of baseline data complicates any precise impact assessment.
Additionally, the initial financial years of 2024 and 2025 are subject to several transitional exceptions—including the transitional presumption provisions regarding the undertaxed profits rule (Chapter 10, Section 19) and country-by-country reporting (Chapter 10, Section 5) under the Minimum Tax Act. These exceptions make early implementation periods fundamentally incomparable to future years.
Consequently, there will be no standard financial period available that excludes both the parallel system and temporary exemptions, which would otherwise demonstrate normal supplementary tax levels before these new rules took effect. Despite these measurement difficulties, authorities estimate the Side-by-Side System’s impact will remain modest, as previously indicated.
The government aims for the law to enter into force by 31 March 2026 at the latest and would apply to financial periods starting from 1 January 2026.
Earlier, Finland’s Ministry of Finance launched a public consultation on 23 January 2026 regarding additional proposed amendments to the Minimum Tax Act, which ended on 4 February 2026.
