Companies Must Engage, Cooperate for Global Tax Reform Success

Businesses worldwide are facing an evolving tax landscape. Shifting geopolitics due to elections and expanding institutional discussions on global tax are impacting the OECD’s two-pillar global tax plan. Effectively implementing Pillars One and Two in 2025 requires sustained collaboration and consensus-building between governments and relevant stakeholders.

Pillar One implementation has faced challenges, though the Organization for Economic Cooperation and Development released calculation tools for implementing Amount B relating the simplification of transfer pricing rules and the Treasury Department and IRS intention to issue proposed regulations to implement Amount B.

Generally, it’s important to consider a more robust adoption of Amount B with features that are mandatory, rather than elective. A more robust Amount B should provide taxpayers and tax administrations with broad-based clarity, stability, and certainty.

The spread of unilateral measures, and any consideration by governments to impose tariffs in response to digital service taxes and the undertaxed profits rule, could hamper economic growth by raising operational costs for businesses and increasing prices for consumers. A multilateral solution through ongoing dialogue with the OECD, the Inclusive Framework, and relevant stakeholders remains essential to deliver a workable Pillar One solution.

For Pillar Two, which includes the 15% global minimum tax, the OECD and G20 must address outstanding technical issues, including global tax reporting, safe harbors, and the interoperability of different countries’ rules.

Continued dialogue among businesses, governments, and the Inclusive Framework should help align interpretations and practices. Implementation requires stability and predictability, and different jurisdictions need to adopt consistent tax rules with little tolerance for fragmentation or diverging requirements that could lead to complex reporting requirements or double taxation.

Businesses continue to push for further simplification, and the Inclusive Framework and governments should strive to minimize compliance costs and burdens while ensuring a minimum level of tax on corporate earnings.

Implementing mechanisms, such as a permanent safe harbor, is important to streamline compliance in regions with little to no chance of additional tax liability. With Pillar Two transitional safe harbors expiring, multinationals will have to make full information return disclosures with hundreds of data points for every entity in their corporate structure.

This translates to a massive data collection exercise for any large multinational. Introducing a permanent safe harbor would exclude entities in countries not expected to pay material amounts of top-up tax from Pillar Two reporting, allowing multinational corporations and tax authorities to concentrate their limited resources on low-tax jurisdictions.

Companies shouldn’t be required to collect more data than can be accessed using existing accounting and reporting systems and processes—compliance under the new rules shouldn’t mean costly system overhauls. There should be simplified rules that adopt reasonable thresholds and exemptions from reporting, consider the materiality of an entity’s operations, and include robust anti-abuse measures.

Uniform application of the Pillar Two rules, standardization of information returns, and setting consistent requirements and deadlines are essential to ensure cohesion and clear timing on implementation. A peer review process would avoid any variances in Pillar Two legislation and help ensure strict compliance with Inclusive Framework administrative guidance.

Efficient information sharing between tax administrations would help reduce administrative burdens. Finally, strong mechanisms to address disputes will be essential to prevent double taxation and maintain the system’s credibility.

Implementing global tax reform is a significant undertaking, and its processes need to harmonize existing tax and transfer pricing legislation. Businesses must seek clarifications, provide feedback, and participate in consultations to ensure the rules are technically sound, practically implementable, and result in minimal unintended consequences.

Sharing implementation experiences and pain points, sector-specific insights, and company-level operational and financial impacts (with supporting data) would help companies advocate for adjustments that mitigate negative effects. Governments and businesses need to work together to assess available technological solutions to streamline compliance and enforcement.

Continued cooperation between businesses and governments can overcome political and technical barriers. A successful path forward requires balancing immediate compliance challenges and revenue goals. There needs to be a long-term commitment to shaping and supporting a fairer, more stable international tax framework that promotes cross-border trade and investment, and inclusive and sustainable growth.

All this demonstrates the essential role of the OECD and the Inclusive Framework as the forum for multilateral cooperation on international tax.

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

Author Information

Alan McLean is the tax committee chairman at Business at OECD.

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