EPM Spotlight: Enhancing Pillar Two

The Pillar Two capability in Tax Reporting is now enhanced with transitional Safe Harbor rules. The Safe Harbor rules allow multi-national companies to avoid GloBE calculations in certain jurisdictions, based on qualifying CbCR and financial accounting data if:

  • the jurisdiction has revenue and income below the de minimus threshold (the de minimus test)
  • the Effective Tax Rate (ETR) equals or exceeds an agreed rate (the Simplified ETR test)
  • there are no excess profits after excluding routine profits (the routine profits test)

Safe Harbor is available as a sub-feature under Pillar Two in the Tax Reporting – Enable Features screen.

Safe Harbor rules apply to fiscal years beginning on or before December 31, 2026, but not including fiscal years ending after June 30, 2028.

NOTE: As a prerequisite, your application must be on the DSO model (see Optimizing the Application Model for Hybrid Aggregation) and the Pillar Two feature must be enabled before enabling Safe Harbors.

Business Benefit: The Safe Harbor rules are designed as a short-term measure that effectively excludes a multi-national company’s operations in certain jurisdictions from the scope of GloBE income.

Steps to Enable

To enable this feature from the Homepage, select Application,  then Configuration, then Tax Reporting – Enable Features, and then select Safe Harbors and then Enable.

Key Resources