Navigating Pillar Two tax compliance: 5 questions to consider

The OECD Inclusive Framework’s Pillar Two tax regime—which aims to ensure that all multinationals pay a 15% minimum tax wherever they do business—went into effect in 2024. These rules bring new complexities for tax computations and tax compliance. At a June 2025 meeting, the G7 countries announced a proposal for a “side-by-side system” for US-parented multinational companies, and a new package of guidance was agreed upon and released by the OECD on January 5, 2026. 

In this interview, Beth Mueller, a tax partner, and Ryan Bowen, a tax principal, both with Deloitte Tax LLP, discuss five questions about the state of Pillar Two compliance, and what challenges and issues tax leaders and CFOs need to address.   

Q: Where do things stand now for US companies and Pillar Two legislation?  

Ryan Bowen: The Pillar Two rules went into effect for 2024, or in some cases 2025, in the more than 60 countries that adopted them. The rules are subject to updated guidance and revision, as we saw from the package that was released by the OECD in early January, that include significant changes beginning in 2026. For US-parented multinationals, these changes include exemption from two of the potential Pillar Two taxes, in recognition that the US has a tax regime that strives to achieve a minimum tax rate on both US and non-US income.  

It is important to note that the new rules do not exempt US multinationals from one of the Pillar Two taxes, the “qualified domestic minimum top-up tax” (QDMTT), that many jurisdictions have implemented. Therefore, US-parented companies will continue to have reporting obligations and tax liabilities to consider. 

Other simplifications and changes to the rules were also released in January, creating new safe harbors for a variety of computations. With the release of these updates to the framework, there are many positive changes but there is more work to be done by companies including figuring out how and when the new rules will be enacted by local legislatures. 

Beth Mueller: In addition to assessing the new changes, companies should focus on the inaugural filing of the new GloBE Information Return (GIR) for the 2024 tax year. For calendar year taxpayers, the due date for this global filing is the end of June 2026, but some countries have earlier deadlines. Although there is some relief for US multinationals beginning in 2026, companies should be prepared now to confirm they’ll be ready to meet country-specific obligations. 

Q: How will Pillar Two reporting work? 

RB: Pillar Two taxation considers all the income a company generates through its economic activities in each jurisdiction and makes sure that the relevant income is subject to at least a 15% tax rate. It’s based on book income with some adjustments to align it more closely with common tax systems, but it’s not like many common controlled foreign corporation regimes, for example, such as those that often tax only a specific subset of income.  

The rules include extensive reporting and compliance provisions. It’s important especially for US-based companies not to pause compliance activities for the 2024 tax year. The message here is your obligations haven’t changed, and you can’t take your foot off the gas in terms of complying with enacted Pillar Two legislation.

In addition, companies now need to assess how the changes will affect them beginning in 2026. While there is relief from some of the Pillar Two taxes, it is expected that continued reporting, though reduced, will be required. 

BM: Pillar Two is an entirely different tax system from any country's domestic legislation. The information requirements can be significant. It’s complex from a data perspective, potentially requiring brand new processes and new compliance activities. 

Q: What do tax leaders need to know and do in preparation for compliance?

BM: Organizations should now be focused on 2024 compliance. Many have been working on it for a while, but there are others that are in the early stages. Tax leaders should have a plan for how this work is going to get done. They should also be assessing data needs for compliance, which pieces of data are not readily available, and what needs to be done to address those gaps. For the most part, they now have just about six months to do this. When you think about the cadence for a public company—quarterly reporting, yearend reporting, and other tax priorities—this shouldn’t be a last-minute exercise.   

Some multinationals will find the information they need for compliance is available, but it may be spread out across various systems, which could make it challenging to pull together for reporting. We have been working on data assessments with a lot of multinational companies. Depending on whether they meet safe harbors, the data required for each jurisdiction could differ. Tax departments should be taking their data assessment and matching it to the data needs for each jurisdiction. That’s step one. Then they need to look at the inventory of data requirements and determine how they will locate each piece of data. For some, that’s not a difficult lift because they largely are meeting safe harbors, and they have systems in place to provide the information they need. For others, however, there may be gaps in the data that’s readily available; figuring out early how they are going to fill data gaps is important. 

Q: What areas of tax are you seeing as especially challenging for compliance? 

RB: I think the No.1 challenge in terms of both data and global adjustments has to do with deferred tax accounting. Even from a data perspective, the global rules envision companies tracking different items of deferred tax expense with much more granularity than usual. Many provisions in the GloBE rules require filers to identify deferred tax expense with respect to a specific asset or a specific item, and many companies don’t have that information readily available on a routine basis.  

Although the newest guidance offers some relief in terms of tracking some of these items on an ongoing basis, it doubles down on the need to first break apart the deferred tax expense item-by-item. Unpacking that—in order to compute specific adjustments or to track movement over time as the full rules require—may require tax teams to work with accounting to find the information in order to compute these adjustments, report these items, and track them on an ongoing basis. They may also need to meet with technology teams to determine new ways of working to make compliance manageable. So it’s not just tax departments that are getting pulled into these conversations. 

BM: Purchase accounting is another difficult area, as is determining the taxes that are considered covered taxes. These are typically not issues you can throw at a tax team to go figure out in a conference room and get it done in a month. It’s usually a team effort, and that’s another reason why a sufficient timeline is important. 

Q: What role does the CFO play in the Pillar Two journey? 

BM: In thinking of the Four faces of the CFO framework, there is an important element of the steward role, since Pillar Two is a new compliance activity. It carries with it risks and costs—the cost of potential tax liabilities certainly, but also the cost of processes to get this work done. There is also an element of the CFO’s strategist role needed in shaping overall organizational strategy and direction. CFOs are facing a complex and changing environment, and the Pillar Two regime is another global complexity. 

This article was written by Anne Field and John Labate, and originally appeared in Deloitte Executive Perspectives in CFO Journal from The Wall Street Journal on Jan 21, 2026. The Wall Street Journal News Department was not involved in the creation of this content.