‘Last Mile’ of Pillar Two Compliance Challenges Multinationals

The OECD’s Pillar Two global minimum tax framework—known as the Global Anti-Base Erosion, or GloBE, rules—has been a decade in the making. One of its key promises has been a synchronized international rollout to create a level corporate tax playing field, enforced through consistent, coordinated filing.

For the roughly 8,000 multinational enterprises in scope, the reality ahead of the June 30 deadline looks a little messier.

While multinational enterprises have largely completed their detailed tax calculations for fiscal year 2024, preparing the GloBE information return, or GIR, is proving tricky. It involves getting the right data into the right format and filed with the right authorities on time. This “last mile” of Pillar Two compliance is where the risks of inconsistencies, missed obligations, and potential penalties are highest.

Practical Steps

To minimize these risks, here are four steps tax teams should take in the run-up to the Pillar Two filing deadline.

Map GIR filing obligations. Under the GIR multilateral competent authority agreement, a multinational should be able to file a single groupwide GIR centrally—typically through the ultimate parent entity’s jurisdiction—and have that filing transmitted to the tax authorities of every constituent entity’s home country.

However, this mechanism only works where both jurisdictions involved have signed and activated a qualifying competent authority agreement.

A number of jurisdictions, including Bahamas, North Macedonia, Slovak Republic and Vietnam, have implemented global minimum tax filing requirements effective for 2024, but haven’t activated the necessary exchange agreements. Groups with entities in those jurisdictions can’t rely on their central filing; they must prepare and submit a separate, full GIR locally, in addition to whatever they have filed elsewhere.

Furthermore, these four countries haven’t joined the common understanding on the support for central GloBE information return filing and exchange, published by the OECD on May 18. Consequently, the penalty‑waiver relief associated with that common understanding may not be available in those jurisdictions.

The good news is that the signatory list is expanding. The Organization for Economic Development and Cooperation updates its signatory list regularly, and the implications of each addition or absence are material, so should be monitored closely.

The financial exposure from missed local GIR obligations can be substantial. Luxembourg, for instance, has enacted penalties of up to 300,000 euros ($348,500) where an expected GIR exchange doesn’t occur and the group can’t provide proof of a local filing. For multinational groups operating through large numbers of entities, even a 5,000-euro per entity penalty for an incorrect notification can amount to a significant liability.

Tax teams should obtain an up-to-date map of GIR multilateral competent authority agreement signatories and cross-reference it against their group’s entity footprint. They should identify every jurisdiction where a local GIR obligation exists independent of its central filing and ensure that local notifications accurately reflect where each GIR will actually be filed.

Audit notifications for accuracy. Notifications and registrations were, for many groups, the first formal Pillar Two obligation, and many were submitted early based on the then-reasonable expectation of centralized GIR filing. As the exchange agreement landscape has evolved, some of those notifications are now inaccurate.

A notification that states a GIR will be filed in the ultimate parent entity’s jurisdiction may no longer be correct if a local filing has since become necessary due to a missing qualifying competent authority agreement. Tax authorities in jurisdictions with notification obligations will expect the information on file to match the filings actually made, and may impose penalties for an inaccurate notification.

Tax teams should review notifications already submitted in each in-scope jurisdiction. Where the planned GIR filing location has changed because a local filing is now required, they should amend or re-file the notification before the substantive deadline.

Treat the legislative and administrative patchwork as a risk variable. Jurisdictions are at different stages of Pillar Two implementation—some with guidance published only weeks before deadlines, and some producing filing forms that were finalized after compliance processes had already begun.

For example, in April, Belgian tax authorities announced a split deadline, extending the filing dates for the qualifying domestic minimum top-up tax and income inclusion rule returns to Sept. 30, while keeping the GIR notification deadline on June 30. Many multinationals concluded that Belgium had pushed its entire Pillar Two filing suite and stopped preparing accordingly.

Several other jurisdictions have published final administrative guidance and official filing forms only weeks before the deadline.

Tax teams should assign responsibility for monitoring official guidance from every in-scope jurisdiction on a weekly basis. They shouldn’t treat any assumed deadline as fixed without direct verification from official sources. It pays to build a centralized compliance calendar that captures jurisdiction-specific deadlines for each filing type: registration, notification, GIR, and top-up tax return.

Centralize coordination. Pillar Two preparation and filing can’t be managed effectively through fragmented, locally-driven processes. A central coordination function is needed to manage the complexity of cross-border filing obligations, the changing exchange agreement landscape, the late publication of administrative guidance, and the interdependencies between notifications, GIR filings, and top-up tax returns.

Groups that rely on local tax teams or advisers to manage jurisdiction filings in isolation will inevitably encounter gaps: obligations that fall between responsibilities, notifications based on different assumptions, and GIR outputs that haven’t been reconciled against registration records or local filing formats.

Where filings are submitted in XML, the technical conversion and acceptance testing adds an additional layer of risk, which local teams may not be equipped to manage alone.

A single, central function should be responsible for knowing which jurisdictions require what, by when, in what format, and for ensuring that the information filed across the group is consistent and defensible.

Multinationals should establish a central coordination point to review the full compliance calendar, cross-check outstanding obligations, validate XML filing readiness, and reconcile notification records against planned GIR submissions.

In the run-up to the Pillar Two June 30 filing deadline, multinationals need to execute cleanly and efficiently to avoid additional costs and compliance risks. Managing the reporting process from the center outwards will be key.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Andrius Tamosiunas leads TMF Group’s Transfer Pricing and Pillar Two services, bringing extensive experience in streamlining global compliance.

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