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Pillar Two Advisory

Global minimum tax readiness for MNEs

As the world moves towards implementing Pillar Two, multinationals are faced with a number of challenges. This global minimum tax is intended to ensure that multinational corporations pay their fair share of taxes, regardless of where they operate. However, implementing this proposal requires companies to adapt to and comply with new and complex rules. In addition, Pillar Two will impact a company's overall tax function, requiring businesses to rethink their tax compliance process as well as global tax structure. In this context, it is crucial for multinationals to understand the challenges associated with Pillar Two and develop strategies to effectively navigate this continuously evolving landscape.

At Deloitte, we combine innovation, technical knowledge and industry insights to help clients efficiently run their tax function on a global scale. Deloitte's Pillar Two Advisory services combine these elements and multidisciplinary teams help clients prepare for Pillar Two with data-readiness, tax accounting, impact assessments, ETR-calculations and tax (re)structuring services.

The need for a proactive approach

As you are most likely aware, the new Pillar Two ruleset is complex. Deloitte’s dedicated global tax policy teams closely monitor both the OECD and local - country developments to help organizations comply with the specific taxes covered under Pillar Two:

  • A main rule, known as the Income Inclusion Rule (IIR) that requires multinationals earning over €750M to pay a minimum 15% tax in each country they operate in
  • A backstop rule, known as the Undertaxed Profits Rule (UTPR)
  • Local tax rules, known as Qualified Domestic Minimum Top-Up Taxes (QDMTT)

Given the complexity and potential impact of the new requirements, global corporations will need to take an informed, proactive approach to compliance, developing a clear understanding of the rules, conducting detailed assessments; and rolling out a targeted, compliant response backed by the necessary data, technology, processes, and resources.

Getting prepared in due time

Address data needs. Pillar Two returns include many new data points, which require time and effort to identify, access, or create. You’ll need to know where this data is coming from, and which tools you need to access it. A data gap analysis is a good place to start.

Set expectations. To manage internal and external expectations, you'll need to generate and communicate estimates of future impact on an established timeline.

Inform tax planning. Scenario analysis can offer insights into projected impacts and risk areas, and help you model restructuring options, election impacts, and technical interpretations.

Advocate and communicate. Working closely with taxing jurisdictions can help you articulate questions and needs—and keep internal stakeholders aligned and up to date on potential impacts.

With so much at stake, clarity and thoughtfulness are a must. Impacted multinationals need to start assessing their Pillar Two related data types, calculations, and reporting processes to ensure compliance with current and upcoming OECD directives .

How Deloitte can help

Deloitte’s Pillar Two Advisory professionals draw on deep collective tax knowledge, industry experience, and new technology to inform your tax approach to transactions and business strategies. Whatever your business objectives, we can help you optimize the Pillar Two related tax consequences of supply chains, M&As, government grants and incentives, or cross-border operations. We help simplify tax management, build new processes and prove oversight while providing global visibility for informed strategic decisions—all with the benefits of working with a single global provider.

Deloitte’s Pillar Two Advisory services

Deloitte’s Pillar Two Tax Advisory services bring together the deep expertise of Deloitte tax practitioners and the analytical power of data and technology solutions to help multinational businesses assess and evaluate the tax implications of Pillar Two. We offer support from initial gap assessment to tax impact analysis to filing the Pillar Two return, and cover the following services:

Include taxes on income, as well as other taxes such as property taxes or sales taxes.