Learning About Pillar Two

The global minimum corporate tax on Multinational Enterprises (MNEs) aim at discouraging them from shifting profits to low-tax countries. To solve this issue Tax Reporting has a new Base erosion and profit shifting (BEPS) capability called Pillar Two of the Organisation for Economic Co-operation and Development's (OECD) Global Tax Deal, to assist in the implementation of a landmark reform to the international tax system and remove gaps and mismatches in tax rules. With this new feature, if a company’s earnings go untaxed or lightly taxed in one of the tax havens, their home country can impose a top-up tax that will bring the effective rate to a minimum 15% tax rate. Government can still set whatever local corporate tax rate they want.

You can use this feature to:

• Define the MNEs within the scope of the minimum tax
• Set out a mechanism for calculating an MNE’s effective tax rate on a jurisdictional basis, and for determining the amount of top-up tax payable under the rules
• Impose the top-up tax on a member of the MNE group which is in-sync with an agreed rule order