Pillar 2

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What is Pillar 2?
BEPS Pillar 2 targets large multinational enterprises with consolidated revenues exceeding €750 million, ensuring they pay a global minimum tax rate of 15%.

It applies to companies with operations in multiple jurisdictions as well as large national groups, assessing the effective tax rate of subsidiaries. If the rate is below 15 %, a top-up tax is required. Certain exclusions may apply, and the framework's success has depended on adoption by individual countries.

The Pillar 2 concept is supported by more than 100 countries worldwide. By 2024, around 35 countries (in particular most of the EU countries) have introduced at least one of the corresponding minimum taxation rules. Others, such as Hong Kong and Singapore, will follow by 2025.

Pillar 2 challenges for companies

Compliance: Companies will need to file new tax returns to comply with the new requirements.
Reporting: Increased transparency requirements mean more work for the internal tax department.
Cost: Complying with the new rules can be costly.
Increase in tax disputes: New tax disputes may arise as a result of the new and additional tax procedures

Kristoffer Kowalski

Partner, Corporate Tax

KPMG Acor Tax in Denmark

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What we do

Our Pillar 2 team will work with you to unpick Pillar 2’s impact on your tax function, formulate the right strategic response, and plan your implementation roadmap. We are ready to support your project so you understand what Pillar 2 means for you. What are its implications for your tax profile, operations, processes, workflows, sourcing models, technology and capabilities? What needs to change – and how?

Grasping the economic and operational impacts of Pillar 2 is vital for organisations to adapt strategically to new tax regulations. Our services help evaluating how Pillar 2 will impact your organisation economically and operationally. This will enable the creation and updating of your Pillar 2 roadmap and project plans.

Digital solution to comply with your Pillar 2 obligations

KPMG's BEPS 2.0 automation technology, KBAT, is a cloud based tool designed to help you evaluate, monitor, compile, analyze, report and comply with your Pillar 2 obligations.

Explore KBAT

Securing resources and support from stakeholder is crucial for the successful implementation of Pillar 2 strategies. We facilitate collaboration across departments to secure the necessary budget and resources from stakeholders outside the tax function, including finance, IT, systems, and legal.

Monitoring global regulatory changes is essential for maintaining compliance and avoiding penalties. Our horizon scanning services keep you informed about Pillar 2 rule implementations worldwide, enabling proactive adjustments to your tax strategies.

Ensuring that your tax processes meet Safe Harbour rules is crucial for minimising risks and optimising tax outcomes. We provide in-depth assessments to identify areas for improvement and ensure your organisation complies with the relevant requirements.

It is essential to ensure that your CBCR processes align with Pillar 2 requirements. Our health checks help evaluate your current reporting methods and identify necessary adjustments to maintain transparency and compliance.

Accurate tax reporting and disclosure are crucial for transparency and building stakeholder trust. Our support services help you navigate the complexities of BEPS-related reporting, ensuring your financial statements reflect the necessary information.

Effective data management is essential for compliance and operational efficiency. We identify gaps, plan remediation, and explore how data can be managed effectively through technology, automation, and process transformation.

Meeting Pillar 2 obligations is fundamental to adhering to international tax standards. Our expertise in process design and technology ensures you can fulfil reporting requirements, leveraging innovative solutions like Managed Service delivery models for optimal compliance.

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Pillar 2 and tax incentives

Article

This article provides an analysis of how the application of different types of tax incentives may trigger a potential Top-up Tax exposure for MNE Groups in scope of the GloBE rules. Moreover, the article discusses how countries may be incentivized to adjust their tax system to ensure tax incentives remain effective and efficient following the implementation of Pillar Two.

Read the article