Pillar Two: A catalyst for global tax transformation

More than 140 countries have agreed to the Pillar Two rules, creating the first genuinely global tax compliance framework. While the underlying aim is simple – ensuring large multinationals pay a minimum tax wherever they operate – the structure is driving profound organisational change.

For the first time, companies must bring together data from across their jurisdictions and report it in a single, consistent global return. While this raises the bar on compliance, it also creates a need for MNCs to have clearer visibility, better governance and stronger strategic decision-making. 

The requirements are complex, and the data demands are substantial. So, with Pillar Two filings for 2024 due this year, compliance has to be at the front of leaders’ minds.

As Deloitte Global Tax Compliance and Transformation Director, Lucia Arias Romaguera, explains: “Most filings will happen at the same time, which means companies with 50 jurisdictions and 200 entities will have to file a lot of returns between March and July this year.

"If organisations haven’t already decided how they’re going to approach this, it has to be a priority.”

From local reporting to global accountability

In addition to local obligations, businesses in scope must calculate, reconcile and report across all their jurisdictions in a single, globally consistent return. It’s a chance to rethink data collection, systems and operating models.

"Pillar Two is reshaping how companies need to do business,” says Kathleen Tack, Partner at Deloitte’s Global Tax Centre, Europe. “It’s not just about compliance; it has a bigger impact than that."

Responsibility for Pillar Two sits with the Ultimate Parent Entity, and this shift elevates the role of tax within the organisation. What once happened at the local level now demands global oversight, shared standards, and stronger alignment between tax, finance, and the wider business.

For tax leaders, the implications go beyond filing mechanics. The regulation has brought tax provision processes, reporting timelines and internal controls into sharper focus, increasing the need for visibility and consistency across the group. But with this challenge comes opportunity.

Lucia says: “This will be a learning experience for everybody. It's the first time we're doing something of this nature, even for local administrations. But if it's successful, it's going to change the future compliance.”

Not all jurisdictions have moved at the same time or pace, with many waiting for clarifications or simplifications. Lucia and Kathleen stress that whatever happens in the future, companies will need to comply with these first deadlines.

"It’s not going away,” continues Lucia. “What I’m seeing in my own market in Spain, and what I hear in other countries, is that entities have looked at their perimeter and the impact on their data. However, there are those who haven’t done detailed calculations, hoping it would be simplified, or haven’t thought through the compliance process. And they’re now rushing.”

Data, technology and the limits of manual processes

At the heart of Pillar Two lies data – vast volumes of it. Effective tax rate calculations require inputs from multiple systems and jurisdictions, each with different levels of data maturity.

This is not a return that can simply be calculated and filed; Pillar Two needs technology.

Standardised XML filings, API enabled tools, and globally aligned workflows are becoming essential. While that may feel like a leap, it’s also a rare chance to upgrade legacy systems and embed consistency.

"Pillar Two is asking for so much data that companies weren’t being asked
for before,” explains Lucia. “If you’re not leveraging technology, it becomes a very difficult task to centralise and manage.”

As a result, technology choices are unavoidable. Additionally, tax, finance, and IT teams must work together to determine how data is sourced, validated and transformed, and how it flows through compliance processes.

For Kathleen, this collaboration is one of Pillar Two’s defining features and could provide new insights and opportunities. It’s also breaking down traditional silos.

"This is the first time compliance has led companies to think beyond the tax department and see the global perspective,” she says. “Tax and finance are no longer separate processes.

“If organisations do this well, the data they gather for Pillar Two can support broader business decisions, including M&A and restructuring."

Building more modern operating models

As Pillar Two prompts many businesses to transform, those adopting centralised or Global Capability Centre-style models are benefiting from the head start.

And while some may see this as a sign to build a new internal platform, Lucia suggests prudence in the short term.

"With permanent safe harbour rules still developing, the entire calculation methodology is going to change,” she notes. “Companies need to be cautious about how much they invest in building internal solutions right now."

“Outsourcing is a good alternative, at least until the rules consolidate and it becomes easier to figure out a plan for the future."

Deloitte’s specialist Exchange Team – a virtual, cross-border community – has expertise in all countries and is helping global organisations prepare for Pillar Two.

They have supported clients with every aspect of their readiness, from accelerator workshops to define their data requirements and sources, to safe harbour analysis, automated reporting processes and technology implementations.

Our end-to-end solution, Pillar Two Agent, underpins everything. It pulls all aspects of the process into one place, from running calculations in every jurisdiction to producing the global XML return. Essentially, it takes the complexity out of the compliance.

An opportunity to rethink tax for the long term

Pillar Two represents an inflexion point in global tax.

Those who use it as a starting block to improve data quality, strengthen governance and modernise operating models are likely to find themselves better prepared for whatever comes next. 

It gives companies a truly global view of where they pay tax, which can be powerful – not just for compliance, but for strategic decision-making.

In that sense, Pillar Two is doing exactly what major regulatory change tends to do: testing existing structures and forcing organisations to explore how fit-for-purpose their systems really are.

For multinationals navigating this transition, the challenge is significant. But so too is the opportunity to move beyond reactive compliance towards a fairer, more resilient, globally aligned approach to tax.