Navigating BEPS 2.0: Pillar Two

Pillar Two: Be prepared for global minimum taxes

Multinational Enterprises (MNEs) need to keep a close eye on developments in relevant jurisdictions as they implement global minimum tax rules into their domestic laws. Most large organizations are only at the start of their global minimum tax journey. Organizations will need to find ways to  calculate their new taxes, evaluate the impact on their financial statements, and report to the relevant tax authorities around the world. They will also need to adapt their internal processes and systems to manage the new computations and data, to calculate their global minimum tax liabilities and satisfy reporting obligations.

Government tax policymakers around the world are collaborating on proposals for significant changes to international tax rules in light of the globalization and digitalization of the economy. The G20/OECD project on addressing the taxation of digital economy began in 2019, building on the final reports issued in 2015 in the earlier project on BEPS.

The current project, referred to as BEPS 2.0, has two elements:

• Pillar One on new nexus and profit allocation rules with the objective of assigning a greater share of taxing rights over global business income to market countries, and
• Pillar Two rules on new global minimum tax, approved in December 2021 by 141 jurisdictions participating in the BEPS 2.0 project.

The Pillar Two Model Rules provide for a global minimum tax of 15% applicable to multinational enterprise (MNE) groups with a global turnover of €750 million or more.

BEPS reporting

Approximately 80% of respondents to our 2024 Global Tax and Finance Operations Survey said they would need to make moderate to significant adjustments to their source system data to make the information tax ready for BEPS 2.0 reporting purposes.