Less than half of UK firms complete Pillar Two assessment

Less than half (42%) of UK firms have completed a Pillar Two impact assessment, according to research from EY.

The survey found that 89% of UK finance leaders expect their tax planning and business operations to experience ‘moderate’ to ‘significant’ change once BEPS 2.0 is implemented.

It also found UK finance leaders are more prepared than global counterparts.

Just 30% of finance leaders worldwide, and 33% across Europe, said that their organisation has completed a Pillar Two impact assessment.

The UK legislation for Pillar Two was included in the recently enacted Finance (No. 2) Act 2023 and amendments have already been proposed for next year’s Finance Bill to keep the UK legislation in line with developments at an OECD level.

The annual survey polled 1,600 CFOs, heads of tax and finance professionals across 32 jurisdictions, including 150 based in the UK.

Laura Mair, EY UK&I partner and tax markets leader, said: “UK finance teams are under substantial pressure as they contend with an unprecedented period of change across the domestic and global regulatory landscape.

“The initial BEPS reporting period begins in less than six months and, while UK companies are further ahead in preparations than their global counterparts, the majority still haven’t finished assessing how this impending change will affect their organisation.”

She added: “Businesses will need to adapt data sourcing, processes and controls to account for the new regime’s reporting and compliance requirements, and these preparations should be made as swiftly as possible.

“Finance teams are also planning for the green taxation being introduced by governments around the world to support national Net Zero transitions. These teams will need to prepare for individual incoming regimes, such as the EU CBAM, as well as a far broader evolution as companies disclose their own transition planning and progress.”