In our November 2021 blog on Pillar Two, we informed you about the key elements of Pillar Two, including the most important transfer pricing elements. In this blog, we share our view on how you can best prepare now that the introduction in FY 2024 is imminent.
Introduction
Pillar Two introduces, probably as from FY 2024, a global minimum tax for MNEs that fall within the scope of the new rules. The rules will apply to MNEs that meet the EUR 750 million turnover threshold.
If your MNE exceeds the EUR 750 million threshold, or if you expect to exceed this threshold in the coming years, it is highly recommended to anticipate the introduction of Pillar Two in FY 2024.
Preparation – use of CbCr data and automation
Over the past year, we have spoken with many Tax Directors of MNEs who will be affected by the new rules. Many of them are already reasonably familiar with the rules and the techniques. The question that remains is: how to act?
Our view is that you should approach this in a practical, flexible and automated manner and make maximum use of processes and data you already have.
A major pitfall is to manually collect, assess and re-assign all potentially relevant data locally from a tax point of view. Even with external help, this can quickly prove to be extremely cumbersome (annually).
How can we help?
Our solution is to build on your current CbCr process to avoid this. Probably all MNEs that fall under Pillar Two have already gained experience with the compilation and sharing of CbCr data. This process usually provides sufficient information for 80-90% of what is required.
With that data and the associated analyses that we build into Coperitas, you will have an automated solution that covers most of your Pillar Two work and identifies the areas you need to focus on.
These areas of focus will differ per MNE, as well as the related data required. A process can be set up via a semi-automated Excel download from your current systems. This is to avoid the need to set up links with, for example, your ERP system, which would require IT support. The data can be uploaded into Coperitas and automatically put in the right places to make the necessary calculations. Text blocks can be added in a flexible and consistent way for internal and external reporting.
Apart from Pillar Two, Coperitas offers a variety of solutions that you can make use of, all under the same license.
We are currently offering our Pillar 2 solution at a special price. Do you want to be in control and prepared in time? Then reach out to our Pillar Two team via hello@quanteraglobal.com to schedule a non-committal talk on our Pillar Two approach.