Global report reveals ‘accelerated adoption’ of Pillar Two measures
Around 70 per cent of organisations have now begun preparations to comply with the Pillar Two reporting requirements, according to a recent global survey.
The majority of organisations in countries subject to the Base Erosion Profit Shifting (BEPS) Pillar Two measures have begun preparations for the new obligations, recent Wolters Kluwer research indicates.
The Wolters Kluwer BEPS Pillar TWO Readiness Index assess readiness among global tax jurisdictions subject to the Pillar Two measures.
The Pillar Two framework presents a global minimum effective tax rate, subjecting multinational enterprises with consolidated global revenue over €750 million to an effective tax rate of 15 per cent from 2024 onwards.
The Index revealed an “accelerated adoption” of the BEPS Pillar Two initiative with over 70 per cent of organisations having begun preparations to comply and 58 per cent now transitioning into the middle-to-late stages of preparedness.
Around a quarter, or 24 per cent, have completed an internal impact assessment.
Wolters Kluwer said this was a positive shift from the previous quarter when most respondents were only in the very early stages of monitoring and assessing the impact of the new requirements.
The index also indicated that 74 per cent of organisations are seeing positive effects from the new framework, including streamlined processes and increased standardisation across varying jurisdictions.
Despite the mostly positive reception, 70 per cent of respondents also foresee potential concerns or challenges around international collaboration.
The main challenge around global collaboration is in relation to data sharing, according to respondents in the survey.
Respondents said that understanding the unique requirements around gathering a large number of data points for Pillar Two from multiple teams and locations, with differing local requirements is complex and time-consuming.
The top hurdles to getting started in BEPS Pillar Two were legislative uncertainty and understanding data requirements which were both at 27 per cent respectively. This was followed by limited resources at 25 per cent.
“When compared to last quarter's results, which had understanding data requirements as the biggest hurdle (38 per cent), the data indicates that organisations are moving through the first stages of hurdles and looking to tackle the next,” the software firm said.
Wolters Kluwer director of product management, APAC, Andy Hung said there is a critical need for multinational companies to meet and manage the complex global requirements related to BEPS Pillar Two.
“We are encouraged by the progress that organisations are continuing to make in their compliance efforts,” said Hung.
“Wolters Kluwer remains committed to supporting our clients as they look to standardise processes and drive more efficient data collection processes.”
