Pillar Two
The Pillar Two rules aim to ensure the biggest multi-national businesses pay tax at a minimum effective tax rate of 15%. These global minimum tax rules apply to businesses with income of at least €750m. Where a business has an effective tax rate of below 15% in a jurisdiction, the Pillar Two rules may require a top-up tax to be paid. These rules are one of the key outputs of the Organisation for Economic Cooperation and Development (OECD) Base Erosion and Profit Shifting (BEPS) project, which was undertaken to make the international tax system fit for a global, digital economy.
Although the objective of the Pillar Two rules is clear, the underlying calculations are complex and there are differences in how different countries have implemented the rules. Many countries have implemented both multinational top-up tax (MTT) and domestic minimum top-up tax (DTT) legislation and short-notice administrative requirements also occur frequently.
Our global network can bring clarity to your Pillar Two strategy and help you develop a sustainable approach, backed by technology, to manage the data collection exercise and deadlines necessary to achieve global compliance with Pillar Two rules.
Our Pillar Two services
Businesses that fall within the Pillar Two rules need to calculate any top-up tax they are liable to pay and will need to understand how to report and be compliant with the Pillar Two rules across the jurisdictions in which they operate. RSM is supporting businesses at all stages of their Pillar Two journey.
We can help you determine whether your business qualifies for a safe harbour and evaluate whether your business will be liable for top-up taxes through services such as:
- Transitional safe harbour analysis.
- Advice on group structuring.
- Qualifying Country by Country Reporting (CbCR) review.
The tax accounting implications of Pillar Two can be complex, but we can give you clarity through:
- Calculation of appropriate top-up tax provision.
- Written advice supporting your audit process, including a review of transitional safe harbour coverage, quality of CbCR and assistance with accounts disclosures.
- Practical advice on tax accounting and deferred tax elements of the rules.
Laying strong data foundations early will ensure your business is in the best possible position to meet its Pillar Two compliance obligations. We can support you with:
- Mapping data into the Pillar Two calculation structure, both from a technical and technology perspective.
- Implementing technology, including return preparation and deadline tracking solutions.
- Scenario analysis and modelling of Pillar Two outcomes.
We can help you meet your Pillar Two compliance obligations globally with end-to-end services, including:
- Assistance completing all Pillar Two notifications and registrations.
- Preparation, review and lodgement of all Pillar Two returns (both MTT and DMTT returns).
- Tracking compliance deadlines across multinational groups.
Our Pillar Two team
RSM’s global team of Pillar Two experts include tax advisers with specialisms in international tax, transfer pricing and tax accounting, with both in-house and practice experience spanning international tax advisory, global tax reporting and tax technology. Through our blend of skills, we help businesses understand their Pillar Two obligations with practical, holistic expertise that demystifies these complex requirements and sets out clear, manageable steps to compliance.
For more information on how we can help you, please contact Sarah Hall or Kaila Engelsman.