Configuring IIR Top up Tax to Parent Payer

Example usecase for configuring IIR Top up Tax

Follow the example steps below:

• Selecting the applicable rule for the Pillar Two Jurisdiction to apply Qualified Income Inclusion Rule (QIIR)

  For each Pillar Two Jurisdiction where the Qualified Income Inclusion Rule (QIIR) is applicable to the specific scenario, year, and period, use the "Pillar Two Jurisdiction Properties" form located in the Pillar Two Administration section.

  

  Note:

  Currently, the application only supports automation for jurisdictions configured as QIIR.
• Configuring Pillar Two Parent Payer Allocation Selection

  To configure parent payer allocations for any QIIR jurisdiction, use the "Pillar Two QIIR Selections" form found under Pillar Two Administration. Select the appropriate Parent Entity, Ownership, UPE/IPE, and Source Account. If additional rules are required, you can add them in the Config Cube under "TRCS_PillarTwoQIIRParentSelections".

  

  Note:

  • QIIR Parent Selection 1 (Pillar Two) and QIIR Parent Selection 2 (Pillar Two) rules are available out of the box.
  • Additional rules can be added under TRCS_PillarTwoQIIRParentSelections member of the Identifier dimension in the config cube.
• Setting Pillar Two Input Rate at Entity or Global Assumptions Level for Multi-Currency Applications

  For multi-currency applications, use the "Pillar Two FX Rates Full Year" form under Pillar Two Administration to enter the translation rate from the Pillar Two currency to the entity’s domicile currency.

  Note:

  The system will use the FX rate associated with the source entity (the entity for which tax is being allocated). If no rate is specified for that entity, the FX rate will be sourced from Global Assumptions.

  Entity-specific Rate Example:

  

  Global Assumption Rate Example:

  

  Note:

  In the example above, entity PillarTwoCA uses the rate 0.44 to translate from a Pillar Two jurisdiction currency of CAD to an entity currency of USD. However, all other CAD entities use the rate 0.22 to translate to USD.
• Configuring IIR-related TAR Automation

  Using target accounts where the "Is_Qualified_Parent_Entity_TopUp_Tax_Allocation_Tgt_Account" attribute was applied, set up TAR automation as needed.

  

• Configuring IIR-related Current Tax Payable Automation

  Using target accounts where the "Is_Qualified_Parent_Entity_TopUp_Tax_Allocation_Tgt_Account" attribute was applied, set up Current Tax Payable automation as needed.

  

• Running "Allocate Pillar Two Entity Top Up Tax to Paying Entity[s]" Rule

  After consolidating and adjusting Pillar Two TopUp Tax Allocation, run Allocate Pillar Two Entity Top Up Tax to Paying Entity[s] (TRCS_AllocateQualifiedParentAndEntityTopUpTax) rule to copy data from TopUp tax to the Entity Data Source in the payer.

  

• Example Data after Allocation Rule

  In the Current Provision folder, use the "Pillar Two Qualified Top-Up Tax By Entity" form to view Top-Up tax allocations by entity and payer, based on the source entity. As part of the allocation rule, all affected payers will be updated accordingly.

  Note:

  The rule will not run if any entity payers are locked, as locked entities cannot be affected during allocations.

  For example, in the screenshot below, Western USA is designated as an IPE for the entity PillarTwoCA, which is paying 763 in IIR top-up tax.

  

• Running Consolidation

  During consolidation, data from the entity-specific data source in the "Pillar Two Qualified Top-Up Tax By Entity" form is copied to Current Provision and ETR. Additionally, the TAR/Current Tax Payable rules configured above will be executed for parent paying entities.

  Current Provision Form

  

  Consolidated ETR Form

  

  TAR Form

  

  Current Tax Payable Automated Form