Global Minimum Tax Compliance: A Closer Look at Pillar Two
With the implementation of the EU directive on global minimum taxation, all EU member states have been required to incorporate the "Pillar Two" regulations into their national laws by the end of 2023. These regulations are designed to ensure multinational companies are taxed at a minimum effective rate of 15%, no matter where they operate. Complying with these new rules involves conducting a detailed analysis of existing data, calculating the so-called "top-up tax," and submitting the required minimum tax report.
At WTS Austria, our interdisciplinary team - comprising tax, accounting, data, process, and IT specialists—is ready to help you navigate the complexities of Pillar Two. We work closely with you to assess the impact on your business and develop tailored solutions to ensure your full compliance with these regulations.
How Does The Pillar Two Framework Work?
Under Pillar Two, a top-up tax can be imposed at the level of the ultimate parent entity (UPE) or in the jurisdiction of low-taxed subsidiaries, referred to as domestic top-up tax. Ensuring that an effective minimum tax rate of 15% is achieved in each jurisdiction involves five crucial steps:
1. Identifying Constituent Entities - The first step is to identify which entities within your group are subject to the Pillar Two regulations.
2. Determining GloBE Income - You’ll then need to calculate the Qualifying Income or Loss for each entity according to Pillar Two regulations.
3. Adjusted Covered Taxes - After identifying the Covered Taxes for each entity, the Effective Tax Rate (ETR) must be calculated for each jurisdiction.
4. Effective Tax Rate - Next, the ETR is compared to the minimum rate of 15%, and if necessary, a top-up tax is calculated.
5. Filling and Reporting - Finally, factors such as the Substance-Based Income Exclusion are considered, and the minimum tax report is filed accordingly.
Digital Solutions for Pillar Two Compliance
At WTS Austria, we offer comprehensive support to ensure that your business is fully equipped to meet Pillar Two requirements through the effective use of technology. We help you choose and implement the right IT solutions, automating data processing and calculations using advanced tools like SAP PaPM/Fiori/BW, AMANA GTC, CCH Tagetik Global Minimum Tax, and DefTax.
Alternatively, for businesses looking to save internal resources, our WTS Pillar Two Managed Service provides a fully managed, cost-effective solution. We work together to develop the necessary data foundation, handle all calculations and evaluations, and deliver results through an intuitive web interface—without the need for a large IT budget.
Additionally, our WTS Transitional CbCR Safe Harbour Tool offers a streamlined solution for calculating the Transitional Country-by-Country Reporting (CbCR) Safe Harbour during the introductory phase of Pillar Two.
With our extensive global network, WTS Austria ensures smooth coordination of Pillar Two compliance across multiple jurisdictions, all while maintaining our focus on tax advisory services—free from conflicts with financial regulations like the Financial Market Integrity Act.
Contact WTS Austria
Ensure your company's compliance with the global minimum tax by partnering with WTS Austria. Our customized, technology-driven solutions help you navigate the complexities of Pillar Two while positioning your business for success in an increasingly digital tax landscape. Reach out to us today to explore how we can support your journey toward full compliance and a more efficient future.
