Whether multinationals adopt a centralized or decentralized approach to Pillar Two will be one of the key factors in correctly establishing the systems and architecture to collect, manage, analyse and store source data for the Pillar Two effective tax rate and top-up tax calculation. 

This in part flows from the existing approach taken for accounting and other systems. 

Centralizing accounting processes has an advantage in terms of efficiency as it can remove redundant operations and streamline reporting. However, given that MNEs operate across multiple jurisdictions a decentralized approach is often preferred given this allows jurisdiction-specific features to be more adequately addressed. 

Of course, even with decentralized accounting processes, MNEs will already be centralizing source data for other international reporting purposes (eg CbC reporting). 

However, for Pillar Two, it is likely that even if an MNE had a centralized approach, some form of decentralization is likely to be required. 

The reason for this is two-fold.