The Importance of Substantive Enactment for Pillar Two (Including a Schedule of Domestic Requirements)

  1. General
  2. What is Substantive Enactment?
  3. When is the Date of Substantive Enactment Different from the Date of Enactment
  4. Schedule of Substance Enactment v Enactment Per Jurisdiction


The Pillar Two GloBE rules only apply in a specific jurisdiction when that jurisdiction has enacted domestic law to implement the GloBE rules.

However, for tax accounting purposes, Pillar Two can have an impact before a law is formally enacted.

Under IAS 12, for reporting periods beginning on or after 1 January 2023 if Pillar Two legislation is enacted or substantively enacted but not yet in effect, an entity is required to disclose information that helps users of financial statements understand the entity’s exposure to Pillar Two income taxes arising from that legislation.

In particular, a company is required to disclose known or reasonably estimated qualitative and quantitative information about its Pillar Two exposure at the end of the reporting period.

As an add-on to this, once Pillar Two legislation is in effect, entities are required to separately disclose the current tax expense related to Pillar Two income taxes. There is no change to this requirement.

Therefore, determining whether a jurisdiction has ‘substantively enacted’ Pillar Two laws is key to identifying whether Pillar Two accounting disclosures are required.

What is Substantive Enactment?

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