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Pillar Two Tax Advisory Services

From policy to practise

Tax reform at this scale changes many aspects of how global businesses are taxed—and in turn, their data requirements, calculation and reporting demands. We can help you to identify and assess the impact of this complex and new legislation in multiple countries.

From policy to practise

The Organisation for Economic Co-operation and Development (OECD) Pillar Two model rules require that in-scope multinational enterprises pay a minimum 15% level of tax on income arising in each of the jurisdictions they operate in. These rules are ambitious in scope and reach, designed to accommodate diverse international tax systems, tax consolidation rules, income allocations, entity classification rules and business structures. For in-scope groups with multinational activity, they're likely to have a significant impact on tax operations.

Tax reform at this scale changes many aspects of how global businesses are taxed—and in turn, their data requirements, calculation and reporting demands. In response, qualifying multinationals and domestic groups must work to understand the new rules and model the global financial, operational and strategic impacts. To comply with Pillar Two data and reporting requirements, businesses must co-ordinate end-to-end tax, finance, IT and legal inputs. This includes having access to the right data, at the right level of detail, evaluating existing technology, generating calculations, preparing and training resources and managing stakeholder expectations.

Deloitte practitioners can help you to assess the impact of Pillar Two on your current and future business plans, from targeted technical support to global impact assessment and compliance oversight. We can help you to identify and assess the impact of this new and complex legislation in multiple countries.

Pillar Two tax 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:

Deloitte's Pillar Two policy team respond to public Pillar Two consultations and have monitored policy developments at the international and national levels. We can help you to understand the evolving consequences of OECD tax rules and local country legislation for your specific business and navigate the complexities of Pillar Two income, covered taxes, compliance and more for the jurisdictions you operate in.

Compliance with Pillar Two demands detailed calculations involving large amounts of highly granular tax, accounting and reporting data—likely much more detailed than you are currently collecting for existing tax reporting. Deloitte's Pillar Two assessment specialists can help you to identify the data to be gathered and evaluate the potential impact on your business by modelling scenarios and communicating the results with powerful business intelligence and data visualisations. Taking into account your unique global operating footprint, Deloitte can help you to estimate your tax liability, now and over time, as both the Pillar Two rules and your business evolve.

Pillar Two's complex new data requirements include hundreds of data points, many of which are seldom captured by existing tax and accounting systems. Deloitte's Pillar Two specialists have created a data accelerator to help you to understand what data is needed, where it might exist and what gaps you may have. Our services help you to identify and capture the specific tax, accounting and company data required for Pillar Two compliance. And we can help you to implement sustainable data collection processes and technology with the potential to transform your tax data strategy.

Global corporations have the opportunity to leverage their SAP, Oracle or other ERP systems to support increasingly complex Pillar Two reporting requirements but will likely require enhancements to be able to provide the required data points, manage complex calculations and integrate with group tax reporting systems. The specifics will depend on the configuration and flexibility of your current system together with reporting deadlines and planned upgrades. Whatever form your system enhancements take, Deloitte can help you bridge the gap between tax requirements and the technology response with end-to-end solutions designed to support both current and expected future OECD requirements.

Pillar Two rules raise a number of data and tax technology related questions. Have you got access to the data, tools and processes you need for compliance? In addition to data assessment—including evaluating the magnitude of data points required—you will need to analyse the information, review exposure, model financial impacts and use the results to inform operational decisions. Deloitte's technology consultants have the skills to help you operationalise new reporting requirements across your ecosystem and business process. We can help you to assess your ability to support new data, analysis and reporting requirements; identify gaps; and design, deliver and even help operate a new or expanded architecture that supports both current and projected Pillar Two requirements. With a deep understanding of business processes, our technology professionals can help to create end-to-end solutions to meet your needs.

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Pillar Two envisages a minimum global tax rate of 15% in the jurisdictions where in-scope multinational enterprises operate. But how its rules are interpreted may vary by jurisdiction. Combining deep country-specific knowledge and an international view of rule development, Deloitte’s technical advisory specialists can help to evaluate the effect of corporate lifecycle events on tax, including the impact of Pillar Two on events ranging from IP locations to mergers, acquisitions, divestitures and reorganisations. By drawing on this deep expertise, we can help you to interpret new and evolving rules with an eye toward the future of your business.

Pillar Two dramatically increases the complexity and scope of tax accounting for multinational entities. Under IFRS and US/local GAAP rules, companies must account for the impact of Pillar Two in their year-end reporting and, potentially, interim reporting. The income tax accounts will need to reflect the minimum global tax for jurisdictions affected by the new rules. Critical to this effort will be having the correct data at the appropriate level and leveraging technology to integrate the information into the tax accounting processes. Deloitte's accounting and tax provision specialists can help you to gather the relevant data, incorporate complex Pillar Two calculations into overall provision computations and meet quickly approaching financial statement deadlines.

Completing the OECD’s Pillar Two information return represents a global undertaking requiring hundreds of data points—many of which are complex composites of underlying data. The size and complexity of the data requirements are further complicated by timing: while in many cases the first return has an 18-month lead time following the accounting period end, subsequent returns must be filed in less time—so even before you complete your first return, you will need to make decisions about ongoing compliance and reporting. From return validation to completing the required paperwork, Deloitte’s compliance specialists can help you file or report on your Pillar Two returns accurately and timely, using our cloud-based Pillar Two Agent.

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Global tax reform is coming—and CEOs need to be ready

For multinational corporations and their leaders, the introduction of new Pillar Two global minimum tax rules requires a new approach to data gathering, compliance and fundamental business strategy.