The Pillar Two minimum tax rules agreed upon by the Organisation for Economic Co-operation and Development (OECD) in 2021 propose a 15% minimum tax rate for many large multinational enterprises. Over 140 countries have signed the agreement, and about 40 have enacted related implementation laws.

These laws and regulations are complex in nature, fundamentally intertwining the taxes of various entities within a company. Filing work will begin intensively in 2025 and 2026. The new rules change how multinational enterprises pay taxes, calculate liabilities, and report under financial reporting and tax compliance requirements. Business leaders should consider investing in technology, data sources and management, and driving change within the organization to efficiently and effectively meet compliance obligations.

Invest in technology

As with any modern transformation, emerging and evolving technology plays a role. Tax leaders should think about how to calculate and submit returns. A strategic approach helps meet immediate compliance needs while considering the broader impact on business processes.

Currently, many tax calculations are still done in spreadsheets. Forward-thinking leaders may want to consider future-proof technology solutions, aiming to build a comprehensive and scalable technology stack and processes.

Leaders need to consider not only internal technology. For example, the OECD only recently released updated administrative packages and versions of the GloBE Information Return (GIR). Companies should be prepared to respond quickly and flexibly to changes.

The filing moment may be the biggest hurdle. Tax teams may be confident in completing Pillar Two calculations, having prepared for years. But how to fill the results into forms and submit them to governments in the fastest, most efficient way still requires effort. Technology can play a role in mitigating challenges in the filing process.

Data sources and management

Complying with Pillar Two regulations will require companies to collect and analyze more data. We estimate over 100 core data points, and most organizations only needed a small portion of them before Pillar Two regulations. Some data exists in current data models or enterprise resource planning (ERP) systems, other data may be stored on employee computers, or may not even exist. In addition to core data points, additional data may be needed and applied during the income tax provision process.

Tax leaders should consider how to obtain the required data sets, establish risk and control mechanisms, develop automation, and fill gaps. Leaders should ask themselves: How does data fit into the broader tax technology strategy? How do enterprise-level strategies related to artificial intelligence or digital transformation play a role? Leaders should develop a roadmap and ensure appropriate investment in tax solutions—this often requires collaboration with teams outside the tax department, such as IT, legal, etc.

Pillar Two reporting will require a transparent data model to drive calculations and meet reporting requirements. As jurisdictions continue to adopt rules implementing Pillar Two, tax leaders should evaluate data strategies and processes to respond to the evolving environment in the coming years with flexible solutions.

Drive change

Pillar Two further integrates policy standards in an increasingly globalized economy and is likely to test many leaders' ability to guide their companies through change, aiming to center discussions on how global enterprises comply. They should understand the full scope, review operations across countries and jurisdictions, and anticipate impacts. Engaging multidisciplinary stakeholders is crucial.

Success often depends on a strong foundation of technology, data, and operational strategy. Tax leaders should further develop governance mechanisms, continuously review their systems, and build operational flexibility to adjust course when necessary, ensuring efficient processes and reliable data quality.

Learn moreDeloitte's insights on Pillar Two rules, and how a strategic, measured, and long-term approach can help leaders navigate the landscape.

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