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      It’s not often you’ll see Pillar 2 - the new(ish) global minimal tax rules for large multinationals – and Formula 1 compared. However, the parallels are striking. New regulations in Formula 1 mark the dawn of a new era in 2026, just like Pillar 2 marks the dawn of a new era for International Tax. Both demand innovation, teamwork and flawless execution.

      With only five months until the first major Pillar 2 compliance filings*, many multinational groups are only just lining up on the starting grid. The lights are about to go out - are you and your team ready to accelerate towards the chequered flag?

      Craig Barrowman
      Craig Barrowman

      Partner

      KPMG in the UK

      Kevin Tipton
      Kevin Tipton

      Director, Global Compliance & Transformation

      KPMG in the UK

      Pre-race checks: getting your team race-ready

      Before the race starts, every successful F1 team completes rigorous pre-race checks. For Pillar 2, these are your essentials:

      • Registrations

        Has the group registered to report Pillar 2 taxes where required? The registration deadline in many countries has already passed and remediation may be required before you’re called to the steward’s office.

      • Payments

        Often the top-up tax payment deadlines will be the same as the filing deadlines – will your group be able to pay on time and have the funds in the relevant jurisdiction?

      • Penalties

        The approach to penalties for failing to file or pay on time differs in each jurisdiction, with some jurisdictions opting to apply significant monetary penalties – have you reviewed your group’s penalty risk?

      The recent “side by side agreement” published by the OECD introduces simplifications for Pillar 2 compliance - most notably through the permanent Simplified Effective Tax Rate (ETR) safe harbour for all groups and the “side by side” safe harbour for US multinationals. However, these changes don’t come into effect until 2026 or later, so there is no immediate benefit for current filings. You can read more about that in our separate article here.

      Your Pillar 2 race guide

      If you’ve not started Season 1 of Pillar 2 compliance yet, here’s our guide to support you in crossing the finish line on time.

      February

      On the grid

      • Finalise your project team, governance structure and workplans.
      • Select outsource provider or technology solution – finalise contracting and begin implementation.
      • Map data requirements and gaps, leveraging existing impact assessments.
      • Initiate stakeholder engagement and awareness sessions.

      February / March

      Lights out and away we go

      • Begin data collection and validation for priority data points.
      • Identify significant technical areas (e.g., M&A, tax credits, unusual ownership structures, etc.) and assess.
      • Conclude transitional safe harbour analysis and begin detailed calculations for non-qualifying jurisdictions.
      • Develop draft processes and controls.
      • Start drafting Pillar 2 policy documentation.

      March / April

      First pit stop

      • Test data extraction and calculation methodologies.
      • Continue with detailed calculations and assess claims and elections.
      • Refine internal controls and reporting processes.
      • Continue training and communication.
      • Review legislative updates and adjust plans accordingly.

      April / May

      Final laps

      • Finalise Pillar 2 calculations and internal reporting.
      • Complete policy and process documentation.
      • Conduct management review and sign-off.

      June

      Chequered flag

      • Submit GloBE Information Return and notifications.
      • Submit Qualified Domestic Multinational Top-up Tax returns (QDMTTs).
      • Transition to business-as-usual compliance and monitoring.

      July to September

      Podium and debrief

      • Continue QDMTT submissions for jurisdictions with later filing deadlines.
      • Debrief project team and capture lessons learned.
      • Begin data collection for 2025 (if not already started in parallel with 2024), considering process improvements.
      • Determine long-term automation strategy taking account of complexity in permanent Safe Harbours.
      • Consider the impact of the Undertaxed Profits Rule (UTPR).
      • Monitor for additional guidance, legislative updates in key jurisdictions and new jurisdictions.

      September to December

      A condensed Season 2!

      • QDMTT submissions for jurisdictions with early filing deadlines (noting that extensions are less likely in Season 2).
      • Look to finalise season 2 in record time, given the advanced (15 months) filing deadline for the GIR and most other returns Begin data collection for 2025 (if not already started in parallel with 2024), considering process improvements.
      • Monitor for adoption of the Side by Side Agreement to determine the impact on 2026 tax reporting/provision.
      • Kick off automation/transformation programme in readiness for end of the Transitional CBCR Safe Harbours.

      Staying on track

      With staggered implementation across jurisdictions, a centralised compliance “pit wall” is essential. Automated tracking tools can help ensure timely filings and avoid penalties.

      Groups must also consider Pillar 2’s effect on deferred tax calculations, disclosures, and the recognition of top-up tax liabilities. Early engagement with auditors is critical to ensure alignment on the analysis needed to support the audit and to ensure Pillar 2 is accurately reflected in financial statements.

      Are you ready for lights out?

      Just as Formula 1 is entering a new era in 2026, so too is the world of international tax. The teams that succeed will be those who prepare early, adapt quickly, and execute flawlessly under pressure.

      Where is your group on the Pillar 2 circuit? The chequered flag is in sight—now is the time to assess your readiness and take action.

      Reach out to your main KPMG contact or our central Pillar 2 team to discuss how KPMG can help.

      *"30 June 2026 is the main filing deadline for multinationals with a calendar year end. The filing deadlines will differ for group’s that have different accounting period end date"?

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      Craig Barrowman
      Craig Barrowman

      Partner

      KPMG in the UK

      Kevin Tipton
      Kevin Tipton

      Director, Global Compliance & Transformation

      KPMG in the UK

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