BEPS Pillar Two is coming

With more than 140 countries signing up to Pillar Two under the OECD Inclusive Framework on Base Erosion Profit Shifting (BEPS), a global minimum Effective Tax Rate subjecting multinational enterprises with consolidated global revenue over €750M to an effective tax rate of 15% from 2024, implementation and legislation is gathering pace around the world. Multinational enterprises (MNE) should look to stay on top of these developments and prepare for the transition now in order to ensure readiness for the administrative, compliance and tax impacts under these new rules. The overall impact on tax teams can be significant with well over a hundred overlapping data points to determine Pillar Two top up tax (or qualified domestic minimum top-up tax (QDMTT)) and GloBE tax liability.

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BEPS Pillar Two timeline

Indicative timeline assuming legislation first applies to 2024

2023

  • Legislation to be introduced in 2023 to implement Pillar II
  • Forecasts of 2024 Pillar II top-up likely required late 2023

2024

  • First year to which IIR (and QDMTT if relevant) are expected to apply
  • Group tax provisions likely require Pillar II estimate of top-up for 2024
  • Forecast of 2025 Pillar II top-up likely required late 2024

2025

  • First year to which UTPR is expected to apply

2026

  • First Pillar II tax filing and payment due for 2024
  • Annual domestic information return/overseas return notification (within same due dates as for top-up tax above)

BAU

  • Pay top-up tax for 2025 by 31 March 2027 etc
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Establish a global minimum tax obligation through a variety of mechanisms, which allows jurisdictions to impose tax on Multinational Corporations (MNCs) where their effective tax rate falls below 15%.
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Requires MNCs to do interrelated direct tax calculations (each having slightly different rules) for entities in each jurisdiction before consolidating figures and determining the final tax payable.
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Enables tax authorities to introduce a similar domestic tax to preserve their tax base.
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Introduces an additional compliance obligation on MNCs (>€750M) to report on their GloBE income.
Challenges for tax teams when addressing Pillar Two
As one of the world’s leading global tax content and technology business, our expert team have assessed the challenges and implications to organisations under the Pillar Two regime and the below summarises how CCH Integrator is best placed to assist the transition and future management of Pillar Two.
Complex regulatory regime
A need to manage new requirements across multiple jurisdictions.

CCH Integrator is a domain expert in tax.

Our platform offers a complete Pillar Two calculation engine to analyse your global effective minimum tax, top up tax and to meet your reporting requirements which can be integrated with your tax provisioning and CbCR processes.
Rules continue to evolve necessitating quick stand up and scaling of technology
A need for processes and internal operating procedures to evolve alongside and as quickly as OECD and local rulings.

CCH Integrator is a low code and no code solution which means that it can easily and quickly adapt to local rules as they are announced.

This allows true agility, ultimate flexibility, and ensured Pillar Two compliance.
Significant data compilation requirements
Minimal additional resources are available within in-house tax teams to collate data, calculate and report according to Pillar Two rules.

The use of Excel, or not-fit-for-purpose technology can no longer suffice. Data errors and inconsistencies can put your business’s reputation at risk for non-compliance to the Pillar Two rules.

As a corporate tax performance management platform, CCH Integrator provides a cohesive, efficient and automated process to capture Pillar Two data and tax position. Easily integrated with any data source, CCH Integrator will capture your data once for multiple reporting purposes.

Providing a single source of truth for the tax function results in increased data integrity and efficiency in preparation as multiple data uploads, consolidation and processing are eliminated.
Unaccommodating systems
Resource and IT budget constraints are ever increasing. Existing systems may not be flexible enough to deal with the increased breadth of data points required.

CCH Integrator is a 100% cloud-based solution that can be used for Direct Tax, Indirect Tax, CbCR, Local File, and Pillar Two reporting making it cost effective when considering all global tax reporting needs. The flexibility to load multiple data sources and formats will ensure that the required data can be captured and incorporated into the calculations.
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In April 2023, in-house tax technology specialists hosted a 30-minute webinar where they shared an overview of the current OECD ruling, discussed the new ruling implications, and how our global tax provisioning software, like CCH Integrator, can address these.

Why CCH Integrator?

  • Integrator is a complete Corporate Tax Performance Management Platform
  • CCH Integrator will guide MNEs through the entire data capture, calculation and reporting requirements of Pillar Two
  • CCH Integrator can interconnect your tax provisioning and CbCR workflow with Pillar Two
  • Provides a single source of truth for data needed for different tax types and allows data to be captured once and used across multiple tax processes

CCH Integrator provides a single platform solution for the office of tax. A corporate tax management platform that interconnects tax provisioning, to CbCR processes with Pillar Two, to filing with the local authority. Built on proven logic, using low code and no code technology, our solution will allow any MNE to easily and efficiently monitor and manage their Pillar Two in-house. Our solution is agile and has been designed in a way that is easily adaptable for local domestic Pillar Two requirements as and when they are required.  Not every Pillar Two provider can do this due to their technology coding limitations and lack of deep tax specialism.

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The CCH IntelliConnect BEPS Resource Centre provides daily news, detailed coverage of developing trends, in-depth analysis, primary source material, plus tools and practice aids to help you navigate the complexities of BEPS.

Updated in real time, you’ll always have the latest information when you need it.

Data integration and data collection

CCH Integrator is ERP agnostic and data can be captured from multiple sources.

CCH Integrator offers standard data upload formats as well as the ability to create any number of file formats to suit your data sources.

The data then populates into standardised schedules through easily maintained mapping templates.

What’s more, as a unified platform across your tax compliance requirements, you can capture your data once and use it many times for the different tax computations required.

With a single source of truth saved in one place, you can have more confidence in your data integrity and reduce the need for dual processes for data input.

Workflow and tax calculations

The CCH Integrator BEPS Pillar Two module will be configured according to the global OECD model while also catering for local legislative requirements.

Maintain control for precise CbC and BEPS Pillar Two reporting by automatically allocating tax structures and jurisdictional rules using the CCH Integrator reporting templates.

CCH Integrator’s flexible design ethos means that even though the Pillar Two rules are being introduced into different domestic legislation requirements and at different timeframes, we are able to continually adapt and configure to meet these evolving requirements.

CCH Integrator Pillar Two calculations work on the basis of data and calculations being created for individual entities, with calculation results being reviewed on a jurisdictional basis.

Reporting, analytics, and visualization

All schedules within the CCH Integrator BEPS Pillar Two module can be extracted as a standalone report. CCH Integrators flexible and intuitive reporting module also allows users to create broader reports with multiple schedules and data reports included.

As the local rules and filing requirements continue to evolve, we will be including the required tax forms and lodgement capabilities.

CCH Integrator Analytics can be utilised to provide analytics oversight for the global calculations of MNCs. Data can be extracted out of calculations in structured and unstructured format to allow for reporting and analytics in external tools.

CCH Integrator is used by all of the Big 4 globally.

Streamline collaboration with your advisor by using CCH Integrator.

As CCH Integrator is 100% cloud, this means that every team member, no matter when they are based, will be working with the most update to data and templates.

Speak to us

We are currently speaking with businesses about their BEPS Pillar Two roadmap, the jurisdictions that they may need to look at, and which technology will best fit their reporting needs.

Our team of in-house tax technology specialists who are ex-Big 4 and global banking, with extensive in-house corporate tax experience would be happy to speak with you.
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