Didn’t the latest G7 and US Treasury announcements kill Pillar Two for us?

No.

While the G7 has agreed that they will not apply the Income Inclusion Rule (IIR) or Undertaxed Profits Rule (UTPR) to US-headquartered groups, since the GILTI regime is considered sufficient, local Qualified Domestic Minimum Top-up Taxes (QDMTTs) remain fully in force.

52 jurisdictions have already enacted QDMTT rules, with at least 2 more drafting legislation, and more expected to adopt. Local top-ups are here to stay.

So what does “coexistence” of GILTI and Pillar Two mean in practice?

The US has requested that other countries allow GILTI to take priority over QDMTT when calculating effective tax rates and credits.

But this is only about how much tax is collected, not whether your local subsidiaries must calculate and file.

Even if GILTI is prioritized, local entities must still compute local top-up taxes, file QDMTT returns, and defend them under audit. The calculation and compliance burden does not disappear.

If we do not have IIR or UTPR exposure, what filings do we still have?

Each jurisdiction requires:

• Local Pillar Two registration in many cases.
• Local QDMTT calculations.
• Local QDMTT returns.
• Supporting documentation for local audits.

Without a unified IIR or UTPR top-up, the entire compliance burden shifts to local level filings, which means your subsidiaries must get the numbers right.

What happens to the Global Information Return (GIR)?

The US position is for US HQ MNEs to be exempt from GIR filing requirements.

Unclear if the end result would be a blanket exemption from filing GIR or an exemption from completing several of the current mandatory tables in the GIR.

However:

• Local tax authorities still need the same entity-level data for QDMTT calculations.
• If there’s no GIR, local QDMTT returns will likely expand to capture more information that would otherwise have been reported centrally.

In short: No GIR does not mean no reporting — it means more detail in more places.

Are these rules retroactive for 2024 or 2025?

Unclear including whether local country legislation allows for rule amendments to apply retroactively, and many offer transitional safe harbours for 2024–2025.

But:

• You still need accurate ETR calculations now to qualify for relief.
• The safe harbour calculations rely on robust financial data — so you need to gather it now.
• No exemptions from local pillar 2 compliance even where CbCR safe harbor exemption is met.

What is the big risk if we don’t get this right?

Even without IIR or UTPR:

• Local tax authorities will audit QDMTT returns.
• Errors or inconsistencies can trigger double taxation or penalties.
• Local teams will face tight deadlines, evolving rules, and country-specific forms — often without enough resources.

How does Orbitax Global Minimum Tax help?

• Calculates entity-level ETRs and top-up taxes in line with local QDMTT rules.
• Tracks local registration deadlines and filing requirements.
• Handles local country Pillar 2 compliance with and without a formal GIR — so you’re ready for either scenario.
• Standardizes data across 50+ jurisdictions, cutting manual work for local controllers.
• Produces audit-ready documentation and workflow tracking for local audits.

Key Takeaway

• Pillar Two is not dead for US MNEs — it has shifted locally.
• QDMTTs are here to stay, with or without a GIR.
• The complexity remains: smart, scalable compliance tools are essential to comply.

Want a deeper dive?

For a comprehensive exploration of the G7’s understanding, its political and legal uncertainties, and how the side-by-side system might evolve, read our full analysis: Pillar Two: Quo Vadis?

This in-depth piece unpacks the knowns, unknowns, and the road ahead for US MNEs in the Pillar Two landscape.