MNEs Must Manage Compliance Risk Under the Updated GIR Template

BEPS 2.0 Pillar Two is the most significant global tax development seen in a generation, and, regardless of ongoing policy debate, it will have material impacts for businesses around the world. More than 55 jurisdictions have enacted BEPS 2.0 Pillar Two provisions, requiring multinational enterprises (MNEs) with consolidated revenues of EUR 750 million or greater to file the GloBE Information Return (GIR) and local Pillar Two global minimum tax returns—with more jurisdictions expected to enact rules in 2025.

In July 2023, the Organisation for Economic Co-operation and Development (OECD) released initial guidance on the format and information to be included in the GIR. The initial guidance included extensive new compliance requirements for MNE Groups to report, among other things, their global entity organization structure and GloBE entity classification for each entity. In January 2025, the OECD released additional GIR Administrative Guidance including an updated GIR template that introduced a range of new tax compliance considerations that companies must navigate. Now, one year before the first standard GIRs will be filed, this article explores these considerations and offers approaches for managing them effectively.

Understanding the GIR Template and Administrative Guidance

The GIR template provides a framework for MNEs to report their global minimum tax financial and organizational data to tax authorities. The template is designed to facilitate coordination among implementing jurisdictions and to reduce the administrative burden on MNEs by establishing a standard compliance format to capture data on Constituent Entities (CEs) and jurisdictions based on the Pillar Two Global Anti-Base Erosion (GloBE) Model Rules and related Safe Harbours. The GIR Administrative Guidance (AG) provides detailed instructions on how companies are to complete the GIR template, including definitions and examples.

The GIR template and AG introduce several new compliance considerations organizations must address. The complexity of the new template, coupled with the detailed requirements outlined in the AG, can create significant challenges for companies, particularly those companies that do not have robust standardized global compliance and reporting processes and data-collection mechanisms in place.

The key compliance considerations companies must address include:

1. Expanded reporting requirements: The GIR template introduces new data fields MNE Groups must complete to report differences between the calculations under the GloBE Model Rules and the calculations under the domestic global minimum tax legislation of implementing jurisdictions. This expanded reporting requirement adds to MNEs’ compliance burden, especially for MNEs operating in multiple jurisdictions that have implemented the GloBE Model Rules into domestic global minimum tax legislation.
2. Additional local reporting requirements: The GIR for an MNE requires companies to provide information on the Transitional Country-by-Country Reporting Safe Harbour and, where applicable, full calculations under the GloBE Model Rules and under local domestic global minimum tax legislation that differs from the Model Rules. Furthermore, jurisdictions that have enacted global minimum tax rules into domestic legislation may require MNEs to provide data for a local version of the GIR filed with local global minimum tax returns. Differences between the GloBE Model Rules and local domestic legislation will create an additional compliance burden for MNEs, as they must satisfy multiple compliance and reporting requirements.
3. Compliance verification: Tax administrations in multiple jurisdictions may inquire about and request supporting information beyond what is included in the GIR. Tax authorities may evaluate compliance with the GloBE Model Rules as well as global minimum tax rules under domestic law. MNEs should compile and retain relevant information when preparing the GIR and local global minimum tax filings and be prepared to provide detailed documentation and explanations to support calculations under both the GloBE Model Rules and domestic legislation.
4. Accurate categorization of jurisdictions: MNEs must identify the jurisdictions in which they have CEs and the enacted global minimum tax laws in those jurisdictions. The tax administration that receives the centrally filed GIR will share relevant information from the GIR with other jurisdictions based on the taxing rights of the other jurisdictions. This new tax information sharing between jurisdictions demands companies report in the GIR complete and accurate information about CEs and jurisdictions, which may increase the administrative burden on MNEs and require additional resources and processes to ensure compliance.
5. Data integrity and accuracy: The combination of global and domestic information reporting in the GIR and the differences between global and domestic information require MNEs have accurate and reliable data to complete the global minimum tax filings. Expanded compliance and reporting for global minimum taxes requires robust data management practices, including data validation and reconciliation processes.
6. Training and awareness: The new GIR template requires comprehensive training for employees involved in global minimum tax reporting processes. MNEs may need to invest in training programs so team members understand the new requirements and incremental demands on reporting processes resulting from the expanded compliance requirements.
7. Technology and systems adaptation: Many MNEs rely on technology to facilitate their tax reporting processes. The new GIR template may require changes to existing systems or the implementation of new technology solutions. Companies must assess their current technology infrastructure and make necessary adjustments to comply with the new reporting requirements.

Approaches for Managing Compliance Issues

There are several approaches MNEs can use to manage effectively these new compliance considerations, from establishing a comprehensive compliance framework and preparing for follow-up requests from tax authorities to investing in people, processes, and technologies.

A comprehensive compliance framework can be key to managing risk. For instance, implementing project management principles to manage worldwide GloBE tax compliance—including a global compliance calendar, coordination of global minimum tax filings (e.g., technical positions, disclosure methods and filing timeline), and information retention to enable efficient and consistent tax controversy response—can help the group meet reporting requirements. Additionally, standard operating procedures for data collection, reporting, and submitting the GIR will maintain consistency and accuracy.

Ongoing global negotiations may lead to modifications in the operation of the global minimum tax. That said, companies must continue to monitor closely legislative and administrative developments on global minimum taxes, while preparing to comply with enacted laws. Companies should consider participating in industry forums or discussion groups to provide practical perspectives to lawmakers and administrators, to gain insights, and to share best practices.

Finally, companies should invest in their people, processes and technologies to build sustainable systems for long-term compliance, including:

• Establishing efficient data collection processes to gather all necessary information accurately and timely;
• Upgrading technology infrastructure and installing new technology solutions to automate data collection and reporting;
• Implementing data validation tools to check for inconsistencies before submission;
• Investing in personnel training and development; and
• Consulting third-party advisors as needed.

These steps can help companies navigate new complex compliance requirements and ensure they meet their obligations effectively.

Conclusion

The updates to the GIR template and GIR Administrative Guidance present significant compliance challenges for MNEs. By understanding these issues and implementing effective management approaches, companies can navigate the complexities of the new compliance requirements and manage compliance risks. Proactive measures, such as training, technology improvements, and data management practices, will not only help MNEs achieve compliance but also foster a culture of accountability and transparency. In an era of increasing regulatory scrutiny, a robust compliance framework is essential for long-term success.

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

Brian Foley is the EY Global Tax Accounting and Risk Advisory Services Leader based in Hong Kong. Jay Wright is an EY Tax Partner in the US, and Rochelle Mascarenhas is an EY Senior Manager in Tax in the UK.

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