All you need to know about Pillar Two – including some things you may not have considered 

The clock is ticking for multinational  businesses whose annual revenue exceeds €750 million. Subject to OECD Pillar Two rules, these multinational organisations have just 12 months to prepare for the complex data collection and reporting mandates that will come into force in June next year. 

Make no mistake, Pillar Two represents a transformative moment for multinational entities (MNEs). In addition to scoping its potential impact, senior tax leaders will need to initiate globally consistent Pillar Two data gathering systems and reporting processes to ensure appropriate controls and governance procedures are in place to minimise the risk of non-compliance. 

The following FAQs provide insights on ways in which tax leaders can navigate the complexities of Pillar Two effectively. 

When is the best time to start preparations? 

If you haven’t already, ideally right now. The stakes are high when it comes to demonstrating due diligence for tax auditing purposes and auditors will expect you to have considered how to gather data and calculate the required values to be compliant when filings to regulators start in 2026.. 

Gathering the required tax data goes beyond pulling reports. It begins with sourcing information from multiple departments, systems and jurisdictions, many of which may not have standardised formats or reliable historical data. 

Initiating an appropriate provisioning environment for Pillar Two is a ‘must have’ and this can take longer than you think. As a guide, plan to take between six to 12 months to implement truly robust processes that will ensure filings are rock solid when the deadline hits. 

What happens if we fail to plan appropriately or in a timely manner? 

Pillar Two compliance might seem like a 2026 problem but delaying Pillar Two preparations risks putting internal resources under pressure at the exact point in time when tax provisioning is the priority focus.  

Getting ahead of the game with Pillar Two preparations will reduce the burden on internal tax teams engaged in undertaking other important reporting cycles during Q4 2025. Added to which, as many jurisdictions around the world have already enacted Pillar Two rules, organisations will need to account for its impact in their financial statements. 

Finally, the consequences of Pillar Two non-compliance are significant. In addition to incurring financial penalties, any failure to comply with filing requirements in multiple jurisdictions will raise an organisation’s risk profile with tax authorities.  

For this reason, organisations must evaluate reporting structures so they can mitigate the risk of minor mistakes or late filings that will trigger deeper investigations by authorities. Investigations that will have long term ramifications where brand reputation, shareholder trust, and stakeholder confidence are concerned. 

Is it simpler to outsource all Pillar Two calculations and reporting to an external advisor? 

Aside from the cost considerations of this approach, outsourcing all things Pillar Two related to a third party will be challenging in more ways than one. For example, organisations still need to assemble country-by country reporting data and provide this to their outsourcing partner. They must also validate all calculations in order to undertake final sign off. 

The good news is that today’s cloud-based tax solutions enable organisations to initiate co-sourcing models that balance the control of in-house management with the experience of external partners. Using these solutions, in-house teams and outside consultants can collaborate and work together in real-time within the same platform. Using this ‘best of both worlds’ approach, organisations can selectively leverage specialist Pillar Two expertise or resources as required to undertake computations, prepare tax returns for selected territories, and complete compliance checks. 

Since Pillar Two tax rules are complex and feature global minimum tax rates, safe harbours, and jurisdictional nuances, organisations should ideally look to utilise platforms that provide automated calculations, built-in regulatory updates, and precise filing capabilities to avoid compliance risks. 

What do we need to keep in mind when operationalising Pillar Two? 

Assuring Pillar Two compliance will require proactive planning and a robust approach to data management and governance. Senior tax leaders will need to implement appropriate systems to identify, gather and process the data required to undertake all calculations and reporting obligations.

Building an engine to undertake all data collection and validation in Excel will prove a tricky task. Added to which, for maximum control of the organisation’s overall tax position, this standalone Pillar Two environment should be integrated with wider enterprise systems. For this reason, utilising tax software solutions that automate and streamline data collection, make it easy to evaluate and integrate country-by-country reporting, is the way forward. 

Alongside delivering a route to achieving the tax control needed to achieve Pillar Two compliance, organisations can leverage this technology to save valuable time and money when it comes to fulfilling local tax requirements. 

Enterprises that proactively adapt their Pillar Two data will be able to ensure compliance across multiple countries, minimise audit risks, and maintain control over their global tax management. 

Rethinking Pillar Two from a strategic perspective 

With more tax authorities sharing and analysing data than ever before, establishing strong tax governance, ensuring data consistency across jurisdictions and leveraging technology to streamline and automate data collection and compliance will be key for reducing audit risk and ensuring organisations can defend their tax positions effectively. 

Initiating Pillar Two preparations now will not only ensure organisations stay ahead of the curve when it comes to coordinating and executing reporting. It also presents organisations with a game changing opportunity to transform their global data collection and tax governance procedures, initiating tech-enabled efficient and transparent tax control frameworks that minimise due diligence risk.