Global minimum tax
Pillar Two
#AreYouPillarTwoReady?
What is Pillar Two?
Pillar Two introduces a global minimum effective tax rate (ETR) for multinational groups with a consolidated revenue of over EUR 750m. These groups are now subject to aminimum ETR of 15% on income arising in low-tax jurisdictions.
Pillar Two, a new global tax system
When does Pillar Two come into effect?
Thailand, along with many other countries, has implemented the Pillar Two Qualified Domestic Minimum Top-up Tax (QDMTT), Income Inclusion Rule (IIR), and Undertaxed Profits Rule (UTPR). The Emergency Decree on Top-up Tax, B.E. 2567 (2024) was enacted on 26 December 2024 and came into effect for fiscal years beginning on or after 1 January 2025. However, many multinationals have been subject to Pillar Two prior to this because they operate in jurisdictions that had introduced the rules with an earlier effective date.
PwC’s Pillar Two Country Tracker is a quick and easy tool to check the status of Pillar Two implementation in different countries and regions all over the world. This tool is regularly updated, and we continuously monitor Pillar Two developments in individual countries.
In addition to a potential impact resulting from top-up taxes, the global minimum tax framework also requires multinationals to gather a large number of data points and significantly increases the compliance burden.
Data Input Catalog
PwC’s Data Input Catalog is at the centre of our end-to-end process for Pillar Two. The Data Input Catalog defines the data requirements for Pillar Two, giving multinationals a comprehensive understanding of the amount of work that lies ahead of them. It can help multinationals anticipate the unique challenges they will face. Acting as the foundation to develop an extensive data strategy, assess operational preparedness, or determine a modelling approach, PwC’s Data Input Catalog is the core to Pillar Two readiness.
Guide for APAC Multinationals
Pillar Two could have widespread impact on your financial operating model. It requires early stakeholder engagement and may require additional budget. To address the multitude of challenges, you must ask whether your current datamodel, systems, technology, and processes can support the requirements introduced by this new international tax framework.
We can help you assess your operating model and processes. We’ll identify gaps and design solutions for the enhanced governance and efficiency that you will need to report and comply with the dynamic Pillar Two environment.
Pillar Two Engine
Our Pillar Two Engine is a structured global model for calculating the impact of OECD Pillar Two. It simplifies modelling, analysis, and calculations, eliminating the need to manually update changes in rules and legislation. It provides compliance and provision-grade calculations, as well as data visualisation to identify key jurisdictions where there is a risk of a Pillar Two tax requirement.
PwC Beacon Tax
Complex, evolving regulations require dynamic, future-focused solutions
A centralised, cloud-based calculation engine for quantifying the impact of Pillar Two, including provision, compliance, and modelling.
The Pillar Two Engine is adapted for relevant local rules and interpretations in order to meet Pillar Two requirements for global and statutory compliance, including constituent entity analysis, Transitional Safe Harbour assessments, and IIR, UTPR, and QDMTT computations and allocations.
What makes PwC’s Pillar Two Engine different?
- Flexible: captures the inconsistent and unique adoption of Pillar Two rules around the world, and evolves as required
- Iterative: modelling accounts for multiple variations and interpretations of local rules, and allows for various data structures/ sources
- Up-to-date: dynamically updated for rule changes and new legislation in each jurisdiction using a centralised database with a vetted calculation engine
We’re happy to schedule an in-depth discussion about the Pillar Two Engine at your convenience.
How we can help you
- Impact assessment and operation preparedness
- Data strategy
- Reporting and compliance
- Pillar Two advisory
- BOI analysis
Impact assessment and operation preparedness
Pillar Two will have a pervasive impact on an organisation’s financial operating model. It requires early stakeholder engagement and substantial budget and resource allocation to address the multitude of challenges.
To prepare for the rules, we can help:
- Conduct technical tax training to upskill relevant stakeholders to understand the Pillar Two rules and requirements.
- Assist in identifying the data requirements and develop a data strategy rooted in systems and processes that can sustain reporting and compliance requirements upon enactment.
- Perform a Transitional CbCR Safe Harbour assessment and full GloBE computations against historical information to assess the magnitude of the exposure.
- Model potential what-if scenarios to help plan for elections under the GloBE Rules.
Data strategy
At times, the overall Pillar Two assessments will be done at a multinational’s headquarters or group level; however, through the data cycle, there will be a lot of dependencies on local data sources. Regardless of whether you’re a subsidiary of a multinational or the headquarters, you’ll face bespoke challenges related to data to support your Pillar Two compliance and reporting obligations. We can help all levels of your organisation:
- If you’re a headquarters, we can help you develop appropriate data acquisition protocols to obtain necessary data packages for performing your Pillar Two assessments, analysis, and computations.
- If you’re a local subsidiary, we can help you understand the technical rules and support in the appropriate data acquisition and strategy to handle intergroup requests and processes.
Reporting and compliance
Pillar Two introduces new compliance and reporting requirements based on new calculation methodologies. For ongoing reporting, compliance, and modelling needs, we can:
- Advise your company and group on scoping and classification criteria under the Pillar Two rules and its application to your company or group
- Support in the quantitative assessment of the Pillar Two rules for your company or group for appropriate tax provisioning and disclosures within the financial statements.
- Prepare/ review the quantitative assessment of the Pillar Two rules to support the preparation of the relevant GloBE Information Return and top-up tax returns, including review of the safe harbours and applicable elections.
- Assist in the preparation and filings of relevant registrations, notifications, GloBE Information Returns, and local top-up tax returns (QDMTT/ IIR/ UTPR).
Pillar Two advisory
The potential impact of Pillar Two should be carefully considered in all transactions going forward for companies that are in-scope of the rules, namely:
- Pre-transaction considerations (inbound investments into a particular jurisdiction, assessing potential M&A to expand your business or reorganise your holding or transactional structures)
- During M&A deals (when negotiating the purchase price and protecting against potential contingent Pillar Two risks)
- Post-deal or upon implementation (including further integration of the target into the group structure and evaluation of the impact to the group’s tax compliance procedures with respect to Pillar Two).
BOI analysis
Companies in Thailand currently enjoying BOI tax privileges may be part of a multinational subject to the rules, and at risk of top-up tax arising from the absence of tax expenses during the holiday or reduced rate periods.
We can support multinationals in evaluating the impact of the BOI privileges to your current Pillar Two top-up taxes and provide advisory and feasibility services to evaluate mitigation options to reduce top-up tax exposure while maximising entitled benefits for investments.
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