Pillar Two compliance—navigating the complexity

Many jurisdictions around the world are moving forward with enacting legislation that implements the Pillar Two global anti-base erosion rules proposed by the Organization for Economic Co-operation and Development (OECD). The key objective of the Pillar Two rules is to impose a global minimum tax of 15 percent that helps prevent multinational companies from escaping taxation by shifting profits to low-tax jurisdictions. Under the new Pillar Two minimum tax regime, companies now face new complex tax reporting requirements. Many multinational enterprises (MNEs) impacted by Pillar Two have already started preparing for these new reporting requirements.

Pillar Two compliance focus areas

Navigating Pillar Two compliance requires a thorough approach that encompasses various key considerations. Key compliance and reporting considerations include:

Determining where to file:

Multinational companies need to assess their tax obligations in different jurisdictions and ensure compliance with local regulations.
Reviewing transfer pricing policies:

It is crucial to review and align transfer pricing policies with Pillar Two requirements to avoid potential tax risks.
Compliance and reporting maintenance:

The Pillar Two framework, in conjunction with local country enactment, significantly increases the compliance burden on multinational companies. A centralized process supported by local/regional resources will need to be established to ensure the timely filing of all returns and notices.
Country-by-country reporting:

MNEs must comply with country-by-country reporting obligations to provide transparency and ensure compliance with Pillar Two regulations.

KPMG approach to Pillar Two compliance

Balanced delivery model

KPMG leverages a balanced delivery model that combines global reach with local knowledge to provide tailored solutions for Pillar

Three-tier delivery model

The KPMG three-tier delivery model helps ensure coordination between global, regional, and local teams, enabling streamlined compliance processes.

Managed service solution

KPMG offers a managed service solution that assists multinational companies in meeting their Pillar Two compliance requirements efficiently and effectively.

Pillar Two compliance—navigating the complexity

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How KPMG can help

KPMG offers a thorough and tailored approach to assist companies with meeting their Pillar Two compliance requirements. Our balanced delivery model, managed service solution, and three-tier delivery model offer efficient and effective compliance processes. KPMG technology solutions, including the KBAT and KPMG Digital Gateway platform, provide centralized data management, real-time visibility, and audit-ready reporting. Our far-reaching KPMG global organization and extensive experience with global tax compliance makes KPMG firms well-equipped to support multinational companies in navigating the complexities of Pillar Two compliance.

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BEPS 2.0: Pillar One and Pillar Two

Here we provide information on Pillar One and Pillar Two, including a comprehensive collection of tax-related thought leadership, webcasts and news to help organizations understand the potential impacts of BEPS on multinational organizations globally.