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      The OECD is working on the global implementation of tax proposals under two “pillars” as part of its BEPS project. Pillar Two focuses on ensuring that large MNEs pay a minimum rate of tax. Keeping up with Pillar Two legislation will be one of the biggest challenges MNE tax teams will face in the next few years. Most of the OECD’s member jurisdictions are moving steadily towards enacting Pillar Two rules, with close to 40 countries implementing the rules in 2024 and up to 60 countries expected to implement rules by the end of next year. As a result, 95 percent of in-scope MNEs will be affected in 2025 by Pillar Two Rules. This first article is designed for those clients just beginning their journey or those that have taken steps forward but need to validate work completed to date.

      Report

      Is your company ready for Pillar Two’s Global Minimum Tax?

      This article is designed for those clients just beginning their journey or those that have taken steps forward but need to validate work completed to date.

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      Read more from the series

      This article explores how MNEs can seize global opportunities by implementing strategic tax responses and business restructurings that are fit for the evolving landscape shaped by Pillar Two.
      Read more

      This article explores how Pillar Two interacts with M&A activities, focusing on acquisitions, dispositions, joint ventures, and carve-outs.
      Read more

      This article explores how business leaders can turn Pillar Two compliance into a competitive advantage.
      Read more

      Key takeaways

      • MNEs need to act quickly to prepare for the OECD’s Pillar Two Global Minimum Tax, which will be enacted in countries around the world as early as 2024.
      • MNEs with consolidated revenue above EUR 750 million are affected. Pillar Two imposes a 15 percent minimum tax rate in each jurisdiction in which an MNE operates.
      • To comply with these rules, tax teams will require substantial new forms of financial data they may not currently have access to within their organizations.

      To prepare for Pillar Two, companies should begin with an impact assessment. This assessment will:

      • Identify the MNE group’s Ultimate Parent Entity (UPE) and the accounting standards applied to consolidate the constituent entities of the MNE.
      • Perform a legal entity classification for each constituent entity of the MNE.
      • Assess eligibility for safe harbor rules that apply for the first three years that Pillar Two rules apply.
      • Model preliminary cash tax impacts.
      • Consider the impact of any planned M&A activity.
      • Prepare for new financial statement disclosures.

      Our people

      Zubair Patel, Head of Tax and Legal, KPMG's CASA region, and Head of Tax & Corporate Services, KPMG in Kuwait
      Zubair Patel

      Head of Tax and Legal, KPMG's CASA region, and Head of Tax & Corporate Services

      KPMG in Kuwait

      Fahim Bashir, Partner — Tax & Corporate Services and Head of Clients & Markets, KPMG in Kuwait
      Fahim Bashir

      Partner — Tax & Corporate Services and Head of Clients & Markets

      KPMG in Kuwait

      Naveen Bohra, Director — Tax & Corporate Services, KPMG in Kuwait
      Naveen Bohra

      Director — Tax & Corporate Services

      KPMG in Kuwait

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