BEPS Pillar Two didn't break your tax function. It was never orchestrated to deliver a single connected, defensible tax position.
Key takeaways
- BEPS Pillar Two didn't create the problem. Most global tax functions grew one obligation at a time over the years and were never orchestrated as one system. Pillar Two just made that impossible to ignore.
- The same underlying data has always fed the tax provision, Country-by-Country Reporting and local returns. Pillar Two needs all of it at once, and tax authorities can now compare what you file across obligations and jurisdictions.
- Tax authorities are connecting their systems faster than most global tax functions. If you can't explain how your numbers relate across obligations, that's now a major governance risk.
- A connected global tax function reuses shared data where it makes sense, controls and reconciles the differences between obligations, and can trace every number back to one defensible tax position.
- Where does your global tax function sit? Take the 3-minute assessment and find out.
Table of contents
- BEPS Pillar Two and Global Minimum Tax: The visibility challenge
- Tax authorities are connecting data faster than MNEs
- What tax practitioners say about tax reporting pressure
- What “connected” data means for tax governance
- Assess your tax operating model
BEPS Pillar Two and Global Minimum Tax: The visibility challenge
Most global tax operations weren't designed. They built up over time, as each new obligation arrived with its own deadline. Each one got its own tools and spreadsheets, its own owners and its own way of collecting data. The tax provision ran one way, Country-by-Country Reporting another and local returns a third. Nobody orchestrated the whole, and as long as each obligation was judged on its own, nobody needed to.
Pillar Two changed what gets judged. It uses data you already collect: entity-level financials, current and deferred tax, and jurisdictional detail. For many groups, this is also the foundation for complying with the Global Minimum Tax regime. What's new is that it needs all of that data at the same time, reconciled and defensible.
To compound this, the rules are still moving. In September 2026, the OECD published a revised GloBE Information Return, the standard Pillar Two return. It brings in the January 2026 Side-by-Side Package and applies to fiscal years beginning on or after 31 December 2025. In a disconnected function, every change like this has to be fixed process by process. In an orchestrated global tax function, it's updated once and flows through.
Tax authorities are connecting data faster than MNEs
This is the real risk. Tax authorities are building connected systems faster than many of the multinational groups they assess. For every large MNE, the ability to reconcile data across obligations is becoming increasingly important.
Pillar Two information returns are being exchanged between tax authorities under a multilateral agreement that dozens of jurisdictions have signed. Country-by-Country reports already move through the established exchange networks, and the OECD publishes the active exchange relationships for both. A number filed in one country can increasingly be checked against numbers filed in others.
Tax authorities also have new tools to do the real-time checking. The OECD's Tax Administration 2025 report covers 58 jurisdictions. It found that 69% of tax authorities were using artificial intelligence in 2023, up from 9% in 2016, and a further 24% were implementing it. The OECD forum on Tax Administration's longer-term vision goes further still: tax processes should be built into the systems businesses already use, so compliance happens upstream instead of through filing after the event.
Expectations of governance are rising at the same time. Ten years into its “justified trust” program, the Australian Taxation Office reports a significant improvement in tax governance among its largest 1,000 taxpayers. Most now show stronger tax control frameworks, and more of those frameworks are independently verified as working in practice. In the United Kingdom, HMRC estimates the corporation tax gap at 18.1% of theoretical liability for 2024–25, and its illustrative breakdown of the overall tax gap includes error as a contributing factor.