Dealing with the Pillar 2 rules continues to be a process of continuous adjustment and anticipation.

This article is written by Juan Dosal and Mario van den Broek. Juan ([email protected]) and Mario ([email protected]) are senior consultants in the International Services Practice of RSM Netherlands, both with a focus on Global Tax Policy Matters.

Speaking at the World Economic Forum in Davos on May 24, 2022, Mathias Cormann, the OECD secretary-general, said there were “difficult discussions under way” and that the landmark agreement, which would ensure multinationals paid more tax where they made their sales, would come into force in 2024 at the earliest. The OECD initial plan was that the BEPS 2.0 rules were going to be implemented by countries in 2022 and in force as from January 1, 2023.


The BEPS 2.0 rules will impact many internationally active companies, most particularly by Pillar 2 of the BEPS 2.0 rules which introduce a 15% global minimum taxation for internationally active companies with an annual revenue of above €750 million. Besides ensuring that internationally active companies are taxed at an effective tax rate (ETR) of 15%, Pillar 2 will trigger a new set of tax transparency compliance requirements. Should the ETR in a jurisdiction of a subsidiary or permanent establishment be too low, a top-up tax (also referred to as Income Inclusion Rule) is levied, typically at the ultimate parent level, so that the overall tax rate reaches the 15% minimum tax rate in each jurisdiction. In addition, should the entire top-up tax not be sufficient based on the IIR, the Undertaxed Payment Rule will come into play as a secondary rule and typically tax will be levied at the level of the other entities in the group. 

Need for action

Furthermore, compliance with Pillar 2 rules will require strong tax data management that could be ensured through implementing a set of operating procedures (with controls). To implement such procedures successfully it will be key to first determine the different Pillar 2 calculation process steps for ensuring compliance, including determining the roles and responsibilities between all stakeholders involved in that process. The implementation of these procedures will be key particularly to ensure that reconciliations from the financial accounting net income to GloBE Income and from income taxes are adequately performed.

Given the many uncertainties ahead in terms of determining the potential impact of BEPS 2.0, it is important for tax departments of internationally active companies to understand the potential impact of these rules to ensure they can start preparing their tax compliance processes for the new global review in a timely manner but also deliver insights on the potential impact to their stakeholders.

Recent experiences learn that internationally active companies have different ways of proactive dealing with Pillar 2 rules. The different phases could vary from developing awareness, taking inventory, and identifying (and modelling out) potential scenarios. RSM can support internationally active companies in this regard by helping with the analysis and modelling the impact of the Pillar 2 rules, setting up internal and governance processes and exploring ways to address increased taxation and complexity.

As there are a lot of dynamic elements to consider, the process of awareness and taking inventory are intertwined for the time being. Modelling out potential working scenarios is important to making the potential impact more concrete and insightful but in an efficient manner. Whether or not the new rules will be implemented in 2023 or 2024, preparation is subject to continuous changes and must be done on an ongoing basis.