OECD BEPS Pillar Two Model Rules: Interdependencies and Automated Compliance

Pillar Two Model Rules and Local Legislation: An Interdependent Framework

The OECD’s BEPS Pillar Two Model Rules establish a global minimum tax framework (the GloBE rules), but real-world compliance hinges on both the OECD model and each country’s local Pillar Two legislation working together. Recent OECD guidance emphasizes that multinationals must navigate a dual set of requirements – calculating taxes under the uniform model rules and under the specific laws of each jurisdiction – to ensure full compliance. Key points from the OECD’s January 2025 guidance illustrate these interdependencies: Local Country Compliance & Reporting Support

• Local Law Determines Liability: Each jurisdiction that has enacted Pillar Two must calculate the multinational’s top-up tax liability using its own locally enacted Pillar Two legislation, not the OECD’s model rules. In practice, this means the actual tax due in a country follows that country’s law. Those local calculations can diverge from the OECD Model Rules for various reasons (e.g. different interpretations, elections, thresholds in local law, or updates in OECD guidance that have not been integrated into local legislation).
• “Common Approach” and Rule Order: All implementing countries agreed to a common approach, which includes a hierarchy of taxing rights. There is an order of application for Pillar Two rules such that jurisdictions with a primary rule (like a Qualified Domestic Minimum Top-up Tax, or QDMTT) calculate first, and jurisdictions with a secondary rule (like an Income Inclusion Rule or UTPR) cannot finalize their calculations until higher-priority jurisdictions have done so. In other words, a country applying a top-up tax on parent companies (IIR) or as a backstop (UTPR) must wait for any countries applying QDMTT on local subsidiaries to compute their taxes first. This sequencing prevents double taxation and ensures each country only taxes its share of the top-up amount.
• Dual Calculations for Reporting: The OECD now makes it clear that compliance involves running two parallel calculations: one under the OECD GloBE Model Rules and one under each jurisdiction’s local rules. The information reported in the GloBE Information Return (GIR) must include results based on the OECD model rules as well as separate calculations under each relevant jurisdiction’s rules, beginning with the Country-by-Country (CbC) Safe Harbor computation. This means even if a country’s law aligns closely with OECD rules, companies still need to show the OECD-consistent figures for comparison and disclosure purposes.

What does this dual approach look like in practice?

Fundamentally, an MNE (multinational enterprise) has to compute its Pillar Two effective tax rate and top-up tax in each jurisdiction multiple times.

An MNE may have to calculate top-up tax for the same jurisdictional subgroup under QDMTT – once using the standard OECD methodology and once using that country’s own legislation. The MNE may then be required to perform further top-up tax calculations for IIR and UTPR under the OECD rules, as well as under the rules of every jurisdiction with taxing rights over that subgroup. This means that in certain fact patterns, there could potentially be dozens of unique top-up tax calculations related to an individual subgroup. – Furthermore, MNE’s must reconcile any differences. The GIR has built-in schedules to capture discrepancies between the OECD and local jurisdiction calculations (Practical Implications of Pillar Two Compliance – Latest OECD Guidance). For example:

• Differences in Tax Amounts: One table (GIR Table 1.4) requires reporting the average difference in top-up tax payable under domestic law vs. the amount under the GloBE model rules. This highlights if local law produces a higher or lower top-up tax on average than the standard rules would.
• Safe Harbor Eligibility Mismatches: Another schedule (Table 2.1) flags cases where a jurisdiction’s safe harbor or exclusion status differs under local rules versus the model rules. For instance, a group might qualify for the OECD’s transitional CbC safe harbor based on consolidated data, but if a particular country hasn’t adopted that safe harbor (or has stricter criteria), the group wouldn’t qualify under that country’s rules – this misalignment must be reported.
• Effective Tax Rate (ETR) and Base Differences: A further table (Table 3.1) calls for disclosure of any key inputs that differ under local calculations, such as the effective tax rate, covered taxes, GloBE income, substance-based carve-out, or other tax adjustments. Essentially, if using local tax law leads to a different ETR or different tax credit outcomes than the pure OECD approach, each such data point must be separately reported.

In all these cases, the reporting is done by jurisdiction and by taxing right.

The guidance notes that the same jurisdiction might appear multiple times in the return – for example, if one country’s subsidiaries fall under the IIR of two different parent jurisdictions, you’d report the differences for each parent’s perspective. All of these comparisons start from the CbC safe harbor test results as the initial filter.

If a jurisdiction is excluded via the safe harbor in either calculation, that outcome is documented before moving to full calculations.

The Role of the CbC Safe Harbor

The Country-by-Country (CbC) Safe Harbor is a pivotal starting point in Pillar Two compliance. Introduced in late 2023 as a transitional measure, this safe harbor allows groups to skip detailed Pillar Two calculations in low-risk jurisdictions if certain CbC report-based criteria (on revenue, income, and taxes) are met. However, whether an MNE can rely on this safe harbor depends on both OECD guidance and local adoption:

• The OECD’s administrative guidance provides the blueprint for the CbC safe harbor, but each jurisdiction decides if and how to implement it. Some countries may fully adopt the OECD’s safe harbor criteria, others may partially adopt or modify them, and some may not implement a safe harbor at all. The OECD guidance explicitly acknowledges that a jurisdiction’s safe harbor rules “may be based on some or all of the December 2023 administrative guidance”.
• This creates a scenario where a group might meet the safe harbor test on an OECD basis but not under a particular country’s rules, or vice versa. The January 2025 guidance requires that the GIR clearly indicate such mismatches. For example, a multinational could report “Yes” for safe harbor eligibility under the model rules, but if the domestic law of a country with taxing rights doesn’t consider them eligible, the GIR must flag that discrepancy.
• Practically, the first step of Pillar Two compliance for each jurisdiction is to perform the CbC safe harbor test (which itself requires assembling essentially a draft CbC report for that jurisdiction’s figures). If the safe harbor criteria are met under that jurisdiction’s rules, Pillar Two calculations for that jurisdiction can be greatly simplified or even skipped. If not, full calculations proceed. Either way, the outcome under both the OECD standard and domestic law needs to be documented.

Exact Calculations vs. Estimates: New Level of Precision

A major difference between tax reporting (provision or accounting for taxes) and tax compliance (actual tax filings) is the level of precision required. In tax accounting or interim reporting, companies often work with estimated figures, rounded totals, and materiality thresholds. In contrast, Pillar Two compliance will demand exact figures down to the last dollar (or euro, etc.) and even cents. Every jurisdictional effective tax rate (ETR) and top-up tax calculation must be precise, as these will feed into official returns and tax bills. Small discrepancies that might be tolerable in a provision process could cause errors or inquiries in a filed return.

This heightened precision introduces additional interdependencies and complexity in timing. For example, an MNE’s initial tax provision for the year might use some estimates for foreign income or draft income tax calculations, but by the time Pillar Two forms are filed, those numbers need to be finalized and exact.

If any figure changes (due to, say, late adjustments in local accounts or final tax assessments), it can ripple through the entire Pillar Two calculation because the rules blend data
from all in-scope entities. Companies need to implement robust controls to manage versioning of data and ensure that by the filing date, all inputs (income, taxes, adjustments) are final and internally consistent. Unlike the flexibility during internal reporting, there is little room for approximation in compliance – precise alignment of data is key.

Sequencing and Timing of Pillar Two Filings

One practical challenge is coordinating the timing of the various Pillar Two filings. The OECD has now confirmed that the GloBE Information Return (GIR) will generally be due 15 months after the fiscal year-end (extended to 18 months for the first year of implementation) (OECD Pillar Two: Information return updates released). Many countries are aligning their local Pillar Two return deadlines with this timeline. This means that for an MNE with a December 31, 2024 year-end (the first year Pillar Two applies for many), the GIR and any local Qualified Domestic Minimum Top-up Tax (QDMTT) self-assessment returns would both be due by June 30, 2026 (18 months after year-end).

However, just because the GIR and local top-up tax returns share a due date does not mean they should be prepared in parallel without coordination. In fact, best practice is emerging to prepare the GIR first and use it as the master source for local QDMTT filings. By completing the comprehensive GIR (which covers the entire MNE group’s Pillar Two calculations) first, the group can then populate each jurisdiction’s QDMTT return using the relevant data from the GIR. This sequencing ensures consistency – the local filings will directly tie to the global calculations. It also avoids duplication of effort. If each jurisdiction tried to calculate its own top-up tax independently at the same time, there is a risk of mismatches or having to redo work once the central calculations are finalized. As Deloitte notes, having to perform multiple separate Pillar Two computations would “inevitably lead to inconsistencies” (OECD Pillar Two: Information return updates released), so a centralized approach is preferable. In short, create one source of truth (the GIR) and derive all local returns from it.

Another timing complexity is that regular corporate income tax (CIT) return deadlines will arrive much sooner than the Pillar Two filings. Many countries require annual corporate tax returns just a few months after year-end (for example, in the U.S., a calendar-year Form 1120 is due by mid-April, or mid-October with maximum extension – roughly 3.5 to 9.5 months after FYE). These CIT returns may now need to incorporate Pillar Two considerations, such as accruing any domestic top-up tax due or making disclosures about Pillar Two filing status. In some cases, local authorities are integrating Pillar Two into the standard tax return process. For instance, France’s new Pillar Two decree mandates that entities indicate on their CIT return (due 4.5 months after year-end) whether a Pillar Two self-assessment has been filed or will be filed by a designated entity, and to identify that filing entity (Pillar Two: Updates December 2024). This requirement means that even before the GloBE Information Return is due, companies must have a good sense of their Pillar Two status and possibly compute a provisional QDMTT. The challenge is that by the CIT filing date, audited local GAAP financials for the year may not yet be available to fully compute Pillar Two. Companies might find themselves performing early Pillar Two calculations based on preliminary data to meet these domestic tax return deadlines.

One way to navigate this is to leverage technology for late-cycle data readiness. Automated data collection tools can pull in the latest financial data as soon as it’s available, enabling rapid calculations. (We discuss technology solutions further below.) The key is to be prepared to do
iterative Pillar Two computations – a preliminary estimate for early CIT filings or accruals, and a final exact calculation for the GIR/QDMTT filings at the 15–18 month mark. Strong version control and documentation of assumptions used in early estimates versus final numbers will be essential to explain any variances.

Safe Harbor Interdependencies

Finalizing the prior year’s Pillar Two numbers by Q3 of the following year has a knock-on effect: it will influence the Country-by-Country Report (CbCR) Safe Harbor status for year 2. The OECD’s Transitional CbCR Safe Harbour allows qualifying groups to avoid a full Pillar Two calculation for a jurisdiction if certain tests are met, one of which is a simplified ETR test based on the prior year’s data Specifically, a jurisdiction’s “simplified ETR” (using CbC report tax expense data) needs to meet or exceed a threshold (the Transition Rate, which is 15% for years beginning in 2023-2024, rising to 16% for 2025, and 17% for 2026 (Safe Harbours and Penalty Relief: Global Anti-Base Erosion Rules (Pillar Two))). If the group’s year 1 tax numbers get adjusted upward due to a Pillar Two true-up, this could raise the simplified ETR for that jurisdiction, helping it meet the Year 2 safe harbor threshold.
Conversely, if a true-up reveals lower covered taxes than initially assumed, the jurisdiction might fail the safe harbor test for Year 2, forcing a full Pillar Two calculation in that year.

In summation, Pillar Two has created inter-year dependencies: the accuracy of Year 1 calculations will directly impact compliance requirements in Year 2. Tax teams need to coordinate the return-to-provision adjustments with their forecasting for the next year’s compliance. By the third quarter, there should be a clear view of which jurisdictions will be able to use the safe harbor for the current
year and which will require the full GloBE computation, based on the finalized prior- year data. This adds another layer of time-sensitive work in Q3: confirming safe harbor eligibility (or lack thereof) and planning accordingly for Year 2 filings.

Ensuring Consistency Across All Reporting

With Pillar Two adding new reporting layers, it is critical for MNEs to reconcile all relevant numbers across different filings and reports. In the new world of global minimum tax, a large amount of tax data will be reported to authorities in various formats – and these data points will inevitably be cross-checked against each other by tax authorities performing risk assessments (Pillar 2 and GloBE: The latest update from the OECD – Thomson Reuters Institute). To avoid red flags, the following must all be consistent (or reconcilable by clear adjustments):

Tax authorities are expected to perform high-level risk assessments by comparing these data sources. Indeed, recent guidance indicates that authorities will use CbCR data (which is readily available to them) to flag inconsistencies and potentially trigger audits (Pillar 2 and GloBE: The latest update from the OECD – Thomson Reuters Institute). A glaring mismatch – for example, if a jurisdiction shows a high profit but almost no tax in the CbC report, yet the Pillar Two return does not show any top-up tax for that jurisdiction – would invite questions. MNEs should proactively reconcile and be ready to explain any legitimate discrepancies (for instance, due to timing differences or permanent differences that affect Pillar Two but not CbCR).

Achieving this consistency requires close collaboration between the teams preparing transfer pricing documentation (for CbCR), the teams handling local tax compliance, and those doing the Pillar Two computations. It may even be prudent to prepare a cross-reference document mapping how figures tie across the GIR, CbCR, and financial accounts for each jurisdiction, to demonstrate the consistency of data or the reasons for differences.

Documenting Entity Changes and Their Pillar Two Impact

Another practical consideration is tracking any changes in the group’s structure or entities and assessing Pillar Two impacts for each change. Pillar Two calculations are highly sensitive to which entities are in the group, their ownership percentages, and their consolidation status. Every time there is an acquisition, disposal, merger, internal reorganization, or change in ownership of an entity, the Pillar Two profile of the group can shift. For example, acquiring a new subsidiary in a low-tax jurisdiction could introduce a new top-up tax obligation mid-year. Disposing of or liquidating an entity might affect the group’s inclusion ratio or deferred tax considerations. Even changes in an entity’s classification (such a becoming an excluded entity like a pension or an investment fund under the rules) need to be tracked.

It is imperative that tax teams document all such entity changes throughout the year and analyze their consequences under Pillar Two. This includes keeping records of entry and exit dates of entities, ensuring that partial-year results are properly included, and checking if any transitional reliefs or elections apply for new entrants or leavers. Many jurisdictions will likely require disclosure of group
composition in the GIR or local forms, so having an up-to-date entity list is part of compliance. Beyond compliance, tracking these changes is important for forecasting – if the group is planning a restructuring, the tax department should model the Pillar Two outcome in advance. In practice, creating a central log of entity changes (with involvement from the legal department or company
secretariat) and integrating that with the Pillar Two calculation tool will help avoid surprises. Each change should trigger a mini “impact assessment” – does this affect our top-up tax for the year or any filings? Being diligent in this area will ensure completeness of Pillar Two filings and avoid errors such as missing an entity or misapplying the rules due to an ownership change.

End-to-End Automation: The Only Viable Path to Pillar Two Compliance

Given the complexity outlined above, end-to-end automation has emerged as the only practical solution for managing Pillar Two compliance. A purpose-built software platform can handle the data, calculations, and reporting far more efficiently and accurately than a manual approach. The Orbitax Global Minimum Tax solution is one such platform, designed specifically to operationalize Pillar Two from start to finish. In fact, Orbitax GMT is described as the only fully automated Pillar Two software solution currently available that maintains calculation templates for all jurisdictions that have implemented Pillar Two. It incorporates both the OECD Model logic and each country’s local rules, and it executes the calculations in the required sequence without human error. Crucially, it also keeps track of evolving laws in over 190 jurisdictions to update those local templates.

Below is an overview of the key workflows in an end-to-end Pillar Two compliance process, and how an automated platform like Orbitax GMT addresses each step:

• Workflow 1: Data Collection & Integration
• Workflow 2: Jurisdiction Calculations & Safe Harbors
• Workflow 3: IIR and UTPR Sequencing
• Workflow 4: GloBE Reporting and Local Filing
• Workflow 5: Compliance Monitoring and Audit Support

Workflow 1: Data Collection & Integration

• Consolidated Data Gathering: Pillar Two calculations require a vast amount of data for each entity – financial statement figures, tax paid, temporary difference adjustments, etc. The process begins by aggregating all necessary data (e.g. trial balances, tax provisions, and CbC report figures) across the MNE. OGMT provides a unified data model so that all relevant inputs (by entity and jurisdiction) are collected in one place, establishing a single source of truth for the computations.
• Multiple Source Integration: The platform is designed to pull data from wherever it resides. Users can upload spreadsheet templates or manually input data, but more powerfully, they can also connect to source systems via API. Using Orbitax’s integration tool (Orbitax Connect), data on entities’ revenue, profit, taxes, etc., can flow directly from ERP systems or consolidation software into the Pillar Two engine. Additionally, the tool can ingest data from existing Orbitax modules (e.g. if the group already prepared a CbC report or has corporate structure data in the system) or by sending out data collection surveys to local finance teams. This flexible data intake ensures that all required information – from global consolidation data to local trial balance details – is captured efficiently, reducing manual data entry.
• Automated Data Mapping: Once data is loaded, Orbitax automatically maps and transforms it to align with Pillar Two definitions. A configuration wizard guides the setup, asking what type of data is being provided, from which source, and what transformations or mappings are needed. For example, it can map local chart-of-account line items to standardized GloBE categories (like income, taxes, tangible assets for substance carve-out, etc.), and convert currencies or apply consolidation adjustments as required. This automation not only saves time but also ensures consistency in how data is treated across all jurisdictions. The result is that by the end of this stage, the platform has a complete, normalized dataset ready for calculation.

Workflow 2: Jurisdiction Calculations & Safe Harbors

• Entity Status Determination: Entity Status Determination is the critical first step in any Pillar Two calculation, serving as the foundation upon which all subsequent processes rest. Before an MNE can assess top-up taxes or apply safe harbours, it must first establish an accurate and compliant representation of its global legal entity structure for Pillar Two purposes. Orbitax GMT identifies Constituent Entities, their classification (e.g., Ultimate Parent Entity, Intermediate Parent, etc.), ownership relationships, and relevant exclusions or transitional reliefs.
• Local Rule Calculation Templates: A cornerstone of Pillar Two automation is recognizing that one size does not fit all for calculations – each jurisdiction may have its own tweaks to the rules. Orbitax tackles this by maintaining a library of jurisdiction-specific calculation templates. When an MNE uploads its data, the system automatically loads the full set of local templates needed based on the group’s footprint. If, say, the group has entities in 10 different countries that have Pillar Two rules, the system will stand up 10 separate but linked calculations – each reflecting that country’s enacted legislation. This means the platform knows, for instance, that Country A allows a particular tax credit as a reduction of covered taxes, while Country B does not, and it adjusts the calculations accordingly. By having these local engines, the platform ensures that each jurisdiction’s Pillar Two tax is computed exactly as per local law.
• Apply CbC Safe Harbor (and Other Exclusions): For each jurisdiction’s calculation, the first step is usually to determine if a safe harbor or exclusion can apply. The platform automatically applies the transitional CbC safe harbor rules for jurisdictions that have adopted them (using the data collected for the simplified tests). If the criteria are met – for example, if the jurisdiction’s effective tax rate (per a CbC proxy) is above the safe harbor threshold – the system will flag that jurisdiction as out of scope for detailed GloBE calculations. Similarly, if the jurisdiction has a de minimis rule or an NMCE (non-material constituent entity) safe harbor for very small entities, those are applied next. By automating these checks, the platform can skip full calculations for low-risk cases, saving computation time and focusing attention on the jurisdictions that truly need detailed analysis. All outcomes of these tests (pass/fail under both local and OECD criteria) are logged for later reporting.
• Compute QDMTT (Domestic Minimum Tax): After exclusions, the platform computes the Qualified Domestic Minimum Top-up Tax (QDMTT) for each jurisdiction that implements one. This involves calculating the jurisdiction’s effective tax rate on GloBE income using that jurisdiction’s rules and comparing it to the 15% minimum. Orbitax GMT’s local template will incorporate any specific domestic adjustments enacted in that country. The result is a precise calculation of any top-up tax due locally. Automating this step is critical – it ensures that if a country’s rules deviate slightly (for instance, using a different carrying period for losses or a unique treatment of deferred taxes), the calculation captures it. At this stage, the platform has determined, for each jurisdiction: (a) whether it meets a safe harbor, and if not, (b) the amount of domestic top-up tax (if any) that country will charge. These QDMTT outcomes then feed into the next stage of group-level calculations.

Workflow 3: IIR and UTPR Sequencing

• Income Inclusion Rule (IIR) Automation: With the local computations done, the platform turns to the Income Inclusion Rule for the parent entities. The IIR is applied by the country where the ultimate (or intermediate) parent is located, taxing its share of low-tax profits of subsidiaries. Orbitax GMT automates this by consolidating all subsidiary data up to each parent and calculating how much top-up tax each parent jurisdiction should collect. Crucially, the software enforces the rule order – it waits until all subsidiary jurisdictions’ QDMTT calculations are complete, and brings those QDMTT amounts into the parent’s IIR calculation as credits or exemptions, where needed. For example, if a French parent owns subsidiaries in Country A and Country B, and Country A imposed a QDMTT on its entities, the French IIR calculation will automatically exclude the income from Country A (or credit the tax) since it’s already taxed up to 15% locally. This ensures the IIR only picks up the remaining shortfall from subsidiaries that had no local top-up.
  
  The platform also considers any IIR safe harbors or exclusions theparent country might have (though in most cases IIR will follow the model rules closely). By automating IIR, the system handles all the layering without the tax team having to manually adjust for each subsidiary’s situation.
• Undertaxed Profits Rule (UTPR) Allocation: After the IIR, any profits of the group that still haven’t been taxed up to 15% are subject to the UTPR (sometimes called the Backstop or UTPR charge). This is allocated among the countries that have UTPR rights (generally, the countries where the group has operations and that implemented UTPR, excluding the UPE’s country).
  
  The platform automatically computes the UTPR allocation in line with the jurisdictional rules – using factors like employees and assets if required – and determines how much additional tax each UTPR country can collect. Importantly, it again checks for exclusions/credits to avoid double counting. For instance, if a portion of top-up tax was collected under an IIR by another country, the UTPR calculation will recognize that and reduce the UTPR top-up tax as needed. The software also applies the UTPR safe harbor (which may exempt certain smaller residual amounts or delay UTPR if the parent’s country is enacting Pillar Two soon). By the end of this step, the platform has computed any top-up tax under IIR and UTPR for all relevant jurisdictions, in the correct order and without omissions.
• Avoiding Errors Through Sequencing: The orchestration of QDMTT → IIR → UTPR by the system is what eliminates the risk of human error in sequencing. For example, Orbitax GMT will not let a user accidentally calculate an IIR for a parent before all QDMTT data is in, nor forget to incorporate a U.S. GILTI adjustment if applicable – these dependencies are built into the workflow. This level of automation is what the OECD meant by “strict sequencing” needing to be followed. The end result is that each entity’s income has been taxed exactly once up to 15%, with the platform accounting for every interaction between different jurisdictions’ rules.

Workflow 4: GloBE Reporting and Local Filing

• GloBE Information Return (GIR) Preparation: Once the calculations are finalized, the platform turns to generating reports and returns. First is the OECD GloBE Information Return – a standardized report that all MNEs subject to Pillar Two will need to file (likely with the lead tax authority or multiple authorities via exchange). Because Orbitax has kept track of both the OECD-model calculation and each jurisdiction’s local calculation, it can auto-populate the GIR with all required data points. This includes the overall global calculations and the detailed jurisdiction-by-jurisdiction figures, as well as the specific tables for differences. For example, where the GIR asks for the difference between local and model top-up tax, the software will have those numbers ready (it computed both in Workflow 2 and tracked the delta). If a jurisdiction was excluded under the model safe harbor but not under local rules, that “Yes/No” flag is automatically checked in the GIR (from Workflow 2 results). Essentially, the same engine that did the calculations now produces the disclosure, ensuring consistency. Tax executives don’t have to manually reconcile and enter these complex disclosures – it’s a byproduct of the automated process.
• Local Pillar Two Forms Generation: Besides the OECD GIR, many jurisdictions will have their own Pillar Two compliance forms (for example, a schedule attached to the local tax return, a standalone Pillar Two return, or a notification form). The Orbitax platform includes a Filing Manager that houses all these forms in an up-to-date library. Using the results from the calculations, the system can populate each local form automatically. If Japan requires a specific template for its IIR calculation or if the EU produces a common Pillar Two return form, the data from the relevant scenario (the Japan calculation or the group calc for EU entities) is mapped into that form’s fields. The forms are presented for review in the platform, often alongside the official form instructions or translations if needed. By automating form filling, the platform eliminates another labor-intensive step and reduces the risk of transcription errors. The tax team can focus on reviewing the outputs rather than manually preparing dozens of different filings.
• Electronic Filing & Submission: Modern compliance doesn’t end at form generation – authorities are moving toward digital filing. Orbitax Global Minimum Tax is built to support end-to-end e-filing. For the GIR, the OECD has released an XML schema, and the platform can produce the GIR XML ready for submission. Similarly, if a country requires electronic submission of its Pillar Two return, the platform can generate the required file (be it XML, iXBRL, or another format). The Q1 2025 release of Orbitax GMT includes functionality to electronically file the GIR and local forms directly with tax authorities in various jurisdictions. This means once the tax team is satisfied with the output, they can transmit it to the government portals through the software. All filing dates and acknowledgements can be tracked, creating a full audit trail of compliance. In short, the platform doesn’t stop at calculation – it carries through to filing the returns and paying the tax (where payment integrations are possible), truly covering the last mile of Pillar Two compliance.

Workflow 5: Compliance Monitoring and Audit Support

• Compliance Obligation Tracking: Pillar Two compliance involves more than just calculations and returns. There are ancillary requirements like registrations (some countries may require MNEs to register as a Pillar Two taxpayer), notifications of who will file the return, instalment payments of top-up tax, etc. The Orbitax platform includes an OECD Admin Rules compliance tool that tracks all these obligations across countries. It’s essentially a calendar and checklist that knows, for example, that Country X requires a Pillar Two registration within 6 months of year-end, or that Country Y’s first payment for QDMTT is due by a certain date. The tool is organized as a series of questions and answers per jurisdiction, covering categories like “Registration required?”, “GIR filing deadline”, “IIR tax return due?”, “Payment due date?”, and so on. For each country where the group operates, the platform can generate a compliance summary report (detailing that country’s requirements) or a comparison report that contrasts OECD baseline requirements with the local rules. This helps the tax department ensure that nothing falls through the cracks – every required action is identified and assigned.
• Legislative Updates and Coverage: Because Pillar Two rules are new and still evolving, keeping track of changes is a challenge in itself. An automated platform is continuously maintained by its provider to incorporate new legislation or guidance. Orbitax monitors updates in all implementing jurisdictions and updates its rules engine accordingly. This means when a country modifies a safe harbor or if new guidance changes a calculation, the platform will reflect that in its templates – the tax team does not have to manually rebuild their models.
  With coverage of over 190 jurisdictions’ tax rules, the software ensures global compliance as rules diverge. Essentially, the platform acts as a living database of Pillar Two law, which is crucial for a multi-year compliance exercise.
• Audit Trail and Review: Given the complexity of Pillar Two, tax executives and auditors will want to review how the numbers were derived. The Orbitax GMT solution provides an auditable report interface that allows users to drill into the calculations for each jurisdiction. One can toggle between jurisdictions to see, for example, how Entity A’s ETR was computed under Country A’s rules versus under the model rules. Every figure (income, adjustment, credit, etc.) in the calculation is traceable to the underlying data. This transparency builds confidence that the automation is correct and makes it easier to explain the results to stakeholders. If an auditor questions why a certain jurisdiction had no top-up tax, the tax team can show that it was due to, say, the CbC safe harbor being met (with the data to back it up). Moreover, if any input needs adjusting (maybe a late-breaking accounting adjustment), the system can recalc and instantly update all affected outputs, ensuring the audit trail captures the change.
• End-to-End Control: The combination of the above capabilities means the entire Pillar Two process is under control in one platform. From data input validations to final filings and compliance confirmations, each step is documented. Notifications and dashboards alert the team to outstanding tasks or discrepancies. In sum, the platform doesn’t just compute the taxes; it project-manages the Pillar Two compliance cycle, providing a level of control and oversight that would be impossible to achieve manually.

Leveraging Technology for Pillar Two Compliance and Planning

Given the complexity and interwoven nature of Pillar Two data and deadlines, MNEs are increasingly looking to centralized technology solutions to manage compliance. A manual approach (e.g. spreadsheets consolidating dozens of entities’ data) is not sustainable for Pillar Two, which must be revisited multiple times a year for different purposes – compliance filings, quarterly reporting, forecasting, and strategic planning. Instead, a dedicated platform with live data connections can greatly streamline the process.

Centralized, live-data systems: Ideally, the group should maintain an in-house system (or a co-sourced cloud platform) that connects to financial data sources and continuously updates Pillar Two calculations. Having live data connections means as soon as entities finalize their trial balances or tax provisions, the Pillar Two impact can be assessed in real-time. This is crucial not just for the year-end filing but for interim needs: tax provision teams can quickly get an estimate of Pillar Two taxes for the quarter, and planners can see the effect of business changes on future Pillar Two exposure. A centralized system also enforces consistency – all users are working off the same logic and data for Pillar Two, rather than disparate local calculations.

Automated data collection: To support late-cycle data needs, the Orbitax automated data collection module offers a one-click setup to pull together all required inputs for Pillar Two. This tool can aggregate data from various sources (ERP systems, consolidation software, spreadsheets, etc.) and feed it into the Pillar Two computation engine. The benefit of such automation is evident when facing tight timelines – for example, when updated actuals arrive just before a filing or when preparing that earlier CIT return. Instead of scrambling to manually gather and reconcile data, a tax team can refresh the dataset with a single click, ensuring that even last-minute changes are captured. Automated data collection reduces the risk of human error in data transcription and lets the team focus on reviewing results rather than wrangling data.

Collaboration and co-sourcing: Pillar Two compliance often involves coordination between central headquarters tax teams, regional/local teams, and possibly external advisors. The Orbitax GMT Workspace collaboration module is designed to facilitate this co-sourcing model. It provides a shared workspace where data and computations can be reviewed and edited by authorized users globally. Key features include the ability to push datasets to local teams or advisors for review – for instance, the central team can prepare a draft Pillar Two calc for a country and then send it via the platform to the country’s tax manager or external consultant for verification. All comments or adjustments can be logged within the system, creating an audit trail of who reviewed or changed what. This collaborative approach ensures everyone is on the same page and reduces version-control issues that come with emails and offline spreadsheets.

Multi-year planning and scenario analysis: Beyond compliance, companies should leverage the same Pillar Two platform for forward-looking planning. The Orbitax GMT Workspace allows users to initiate multi-year planning scenarios. Tax teams can model, say, the impact of tax law changes,
business growth, or entity restructurings on their Pillar Two exposure over the next several years. They can adjust assumptions (e.g. future income, planned tax credits, introduction of a QDMTT in a new country) and instantly see how the group’s ETR and top-up taxes would evolve. This scenario
capability is invaluable for making strategic decisions– such as whether to consolidate operations in certain jurisdictions or how an acquisition might increase top-up tax. It turns Pillar Two from a purely compliance exercise into a tool for tax optimization and risk management.

Leveraging Technology for Pillar Two Compliance and Planning

In summary, technology enablement is key to meeting Pillar Two requirements efficiently. A purpose-built solution that integrates data collection, calculation, collaboration, and planning can save significant time and reduce risk. It allows the tax function to repurpose the arduous compliance computations for other value-added activities like forecasting and strategizing. As Pillar Two moves from theory into practice, having these robust systems in place will differentiate companies that manage to comply and plan with confidence from those that struggle with manual processes.

Conclusion

The OECD BEPS Pillar Two regime introduces an unprecedented level of complexity in international tax compliance. The need to apply both a global rule set and dozens of local rule sets in parallel – and to do so in a tightly coordinated sequence – poses a serious challenge for multinational tax departments. The OECD’s own guidance makes it evident that navigating these interdependencies is not feasible without automation, given the data volume and the risk of error if done by hand. An end-to-end solution like Orbitax Global Minimum Tax is therefore not just advantageous but essential. It leverages technology to handle the heavy lifting: integrating data from all corners of the organization, performing meticulous jurisdiction-by-jurisdiction calculations (while respecting the OECD ordering and local nuances), and seamlessly generating all required reports and filings. This level of automation ensures that a tax executive can have confidence in the Pillar Two compliance process – that all jurisdictions are properly calculated and reported, that the group is meeting both OECD and local requirements, and that the outcome (the global minimum tax paid) is accurate and optimized. By using a comprehensive platform, companies can manage Pillar Two’s complexity within the tight deadlines, freeing up their teams to focus on strategy rather than number crunching.

In summary, the interplay of OECD and local rules under Pillar Two is intricate, but with an end-to-end automated approach, it becomes a controllable, transparent process – one that transforms a compliance burden into a streamlined workflow, ready for the scrutiny of both regulators and executives.

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Sources

• OECD, Guidance on the GloBE Information Return, January 2025 – as summarized in Orbitax Expert Corner.
• Orbitax Expert Analysis: Gratian Joseph, “Practical Implications of Pillar Two Compliance – Latest OECD Guidance,” Feb 2025.
• Orbitax, Global Minimum Tax Solution – Platform details and release notes.
• Orbitax, International Tax Platform v8.6 Release Notes, March 2025 – Workflow and compliance tools.
• Thomson Reuters, Orbitax Global Minimum Tax (Product Overview).