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A Review of the Polish Draft Law to Implement the Pillar Two GloBE Rules

Why Tax Data Mapping for Pillar Two is Crucial

GloBE Country Guide: Barbados

Joint Ventures and the Allocation of Pillar Two Top-Up Tax

Why Tax Data Mapping for Pillar Two is Crucial

Contents
  1. General Approach to Managing Pillar Two
  2. Data Extraction, Transformation and Storage for Pillar Two
  3. Tax Data Mapping Assessment

General Approach to Managing Pillar Two

The Pillar Two GloBE Rules will add a further burden on MNEs. However, if correct data extraction, cleansing and transformation systems are established the burden can be significantly reduced after the initial set up. Before all this is the tax data mapping assessment. This is the crux of an effective approach to implementing a system to manage Pillar Two.
 
MNE’s already have many different international tax reporting obligations aside from jurisdictional tax return submission, including CbC reporting (including EU public CbC reporting from June 2024), local and master files for transfer pricing and DAC 7 (from 2023).
 
Pillar Two includes an additional reporting obligation but in any well designed data management system data processes that are already in place (eg for CbC reporting) can be utilised for Pillar Two. 
 
Of course, the challenge with Pillar Two is that it essentially creates a separate, additional tax regime for MNEs.
 
Income for instance will be determined for financial reporting purposes, for tax purposes and also for Pillar Two purposes. Each is subject to separate rules. Therefore data extracted for Pillar Two purposes will be subject to a specific Pillar Two data transformation process that will then enable the calculation of the jurisdictional effective tax rate. 
 
The basic process for MNE’s will be: 
Tax Data Mapping Assessment
Data Extraction
Data Transformation
Data Storage
Pillar Two ETR Calculation

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Lee Hadnum
Lee Hadnum
Lee is a qualified Chartered Accountant and Chartered Tax Adviser. A former Senior Tax Analyst at Bloomberg Tax, Lee began his career in Ernst & Young's Entrepreneurial Services department and has 20 years of international tax planning experience. Lee's books have been recommended by The Times, The Guardian and The Telegraph.

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