Although still evolving, Pillar Two is shaping up to be an epic lift for international tax teams. The sheer volume of data to manage, people to assemble, and processes to align will require financial and human resources and a solid plan of attack. And with a 2024 go-live date for initial reporting, immediate action is the only option.
Here’s how to start:
An unfamiliar process packed with decisions and deliverables, Pillar Two will require a global, cross-functional team empowered by tax technology. Review the steps below for a sense of what’s needed to ensure a smooth and mistake-free Pillar Two implementation.
Map out a plan—In addition to setting external deadlines, Tax should set strict internal deadlines to educate management on Pillar Two’s potential impact. That includes risks and opportunities presented by Pillar Two model rules, as well as all resources needed to properly implement a new global process. You’ll need to define the scope of—and make vital design decisions around—all deliverables.
Identify and organize data—Data takes center stage in Pillar Two considerations. Between tax authorities and taxpayers, tens of thousands of datapoints will be needed, many of which aren’t tracked in legacy processes and systems. Expect to make a range of data-related decisions—from sourcing to analyzing to reporting. Work with a global team to locate, organize, secure, and share what’s needed for all obligations and key decision points.
Assemble your team—With its worldwide reach, the Pillar Two process requires a single owner and personnel at headquarters and in local countries. Team members will need to understand their respective missions, and Tax must help non-tax stakeholders comprehend how Pillar Two could affect them. Explore all aspects of putting the right people in the right places, from defining roles and responsibilities to training across departments to using third-party help.
Determine the right technology—Know what to look for in tax technology to support and streamline a huge, new tax obligation. You’ll need to locate, collect, and store relevant data and reuse it across processes. Fast access to data at multiple levels is a must, and the more automation you use—the more time, labor, and cost you save. And Tax needs the ability to illustrate Pillar Two probabilities in ways management can understand.
Pillar Two has the potential to change how multinational enterprises do business. It’s the job of Tax to elevate implications to the broader business and its decision makers to ensure a well-planned tax strategy.
The longer Tax waits to act, the harder it will be to educate the organization and manage time and cost—resulting in more work and worry for everyone. The sooner Tax acts, the smoother the implementation, deeper the understanding, and easier it will be to control all facets of the process.
Use this time to move forward. The Complete Pillar Two Playbook by Gary Colbert, CSC Corptax Senior Director and recognized international tax expert, fully details a four-step plan ready to use right now. Learn the gamut of resources you’ll need to make Pillar Two happen—and get the info you’ll need to get buy-in for budget.