KPMG report: Focus on country-by-country reporting (CbC) data with Pillar Two minimum tax and public CbC reporting

Pillar Two minimum tax in 2024, public CbC reporting the following year

Pillar Two minimum tax and public CbC reporting

When the Organisation for Economic Cooperation and Development (OECD) launched country-by-country (CbC) reporting in 2015, they said it was just a risk assessment tool that would only be available to tax administrations. Taxpayers, however, generally feared the data would be made public or used for other purposes. Less than 10 years later, it finally looks like those concerns are becoming reality. Just before Christmas, the EU reached agreement on its Pillar Two minimum tax directive and the OECD dropped its transitional Pillar Two CbC reporting safe harbor, which to state the obvious, is based on CbC reporting data. As multinational enterprises (MNEs) are reviewing this safe harbor, many are asking themselves whether they are comfortable relying on CbC reporting data for more than a tax risk assessment.

On the public CbC reporting side, the writing is on the wall. Pretty soon almost all U.S. MNEs will need to disclose country-level data in some form. The pressure is coming from around the world:

  • The EU’s public CbC reporting directive was approved in 2021 and comes into effect for calendar year companies in 2025, although some countries like Romania intend early adoption.
  • Australia’s 2022-2023 budget included a provision for public CbC reporting, which if adopted, applies to periods beginning on/after 1 July 2023.
  • The Financial Accounting Standards Board (FASB) is preparing a proposal to require companies to provide a detailed breakdown of the income taxes they pay globally.

For public CbC reporting, there will be a minimum level of tax disclosures required. For example, U.S. MNEs with EU operations will be required to disclose separately corporate income tax for each EU country and any country on the EU grey/black list and an aggregated corporate tax figure for the rest of the world. MNEs already have country-level corporate income tax data from the CbC reporting they have been filing with their tax return for many years; however, MNEs will need to analyze how that data looks from the lens of the average person who is not familiar with corporate financial statements and how it looks segmenting certain countries but aggregating others. MNEs can do this in conjunction with verifying the data sources as they implement the Pillar Two CbC reporting safe harbor. For the public CbC reporting, MNEs could consider focus groups to understand how their tax story will look to the public, and use those groups to understand how to frame their narrative in the best possible light.

But corporate income tax data does not tell the entire story of an MNE’s total tax contribution. MNEs are responsible for significant other types of taxes: indirect taxes, customs, payroll, real estate and carbon taxes, to name a few. While most MNEs do not have this data easily arranged by country, many are asking whether now is the right time to reconfigure systems, collect the data, and consider if it makes sense to report country tax data that extend beyond corporate income tax to give a more complete picture of just how much tax they are contributing. MNEs will not need to include every type of tax they pay in this calculation, but even just showing the main components can give a much more representative picture. Building the pipes to gather the by country tax data will not be easy—but given the direction of travel towards stakeholders demanding transparency, the investment now seems worth it. 

Once MNEs have the total tax contribution data they can take a step back and consider the narrative they want to tell. MNEs could include their tax data publicly along with a group-wide tax policy that sets forth their approach towards key aspects of taxation and the governance behind that approach. This is also a good time for tax departments to connect with the sustainability group and see if the tax data and narrative should be included in the corporate sustainability report that almost all companies are now publishing.

There is a lot for MNEs to consider in the tax transparency and compliance space. Given that MNEs are being required to slice and dice country data for the upcoming minimum tax compliance, now is the time to take a holistic view of what is needed on a by-country basis. 


For more information, contact a KPMG tax professional in Washington National Tax:

Jessie Coleman |

John DerOhanesian |

Alistair Pepper |



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