error
Subscriptions are not available for this site while you are logged into your current account.
close
Skip to main content
Submit RFP

      So, the first ever set of BEPS filings are done and dusted. Well, sort of.

      For calendar year-end companies, 30 June 2026 was the deadline for returns under BEPS Pillar Two – these being:

      • GloBE Information Return and Notifications
      • Qualified Domestic Minimum Top-up Tax returns

      For the first time, multinational firms had to report their tax positions and calculate their effective tax rates, potentially in dozens of jurisdictions. And where their ETR was less than 15%, they’ve had to calculate the top-up tax owed to bring it up to the Pillar Two global minimum.

      The first filing season didn't just test organisations' ability to comply with Pillar Two. It exposed the strengths and weaknesses of their processes, data and governance frameworks underpinning compliance.

      Craig Barrowman
      Craig Barrowman

      Partner

      KPMG in the UK

      Pillar Two exposed weaknesses in existing tax operating models

      It’s fair to say that the process hasn’t been without hitches – for taxpayers and tax authorities alike.

      Among taxpayers, some organisations had, of course, prepared early and were in reasonable shape as the deadline neared. But getting the final details in order still proved difficult.

      Others started later – some too late. As a result, they faced a much more intensive, last-minute push. And they risked failing to make certain elections on time, which will have knock-on effects in future years,

      Meanwhile, tax authorities encountered problems of their own. Several had to delay launching their submission portals, as their systems weren’t ready to receive GloBE returns. In some cases, filings were routinely rejected, as authorities’ validation checks weren’t functioning properly.

      Teething problems, are of course, understandable. BEPS Pillar Two is a first-of-its-kind. It’s hugely complex, global tax legislation, which demands information from firms that they’ve never had to collect in such granular detail.

      Preparing the ground for the next cycle

      The first Pillar Two filing season provided an important reality check for multinational tax functions. Through our work supporting businesses across jurisdictions, we encountered a consistent set of issues relating to data, governance, localisation and operating models.

      These experiences highlighted five key lessons tax leaders can take into the next reporting cycle:

      Pillar Two has a common set of rules that apply to every jurisdiction – with some local nuances introduced by individual tax authorities. That means 80% of the compliance work can be done centrally, with local teams then taking over to meet their countries’ particular requirements.

      We’ve found taking a centralised approach far more efficient than working country to country. But a word of warning: meeting some local expectations can be piecemeal.

      In Spain, for example, companies must submit returns for each legal entity operating in the jurisdiction – not one, consolidated group filing. Italy requires separate reports for joint ventures. Vietnam’s tax authority requests reporting in the local language.

      Leaving as much time as possible for local compliance is vital – so start the centralised work for next year now. You’ll want that out of the way before your 2026 year-end looms, and financial reporting takes over during Q1 2027. And keep in mind that around 10 more jurisdictions come into the BEPS fold next year.

      Get your local teams involved from the beginning of the compliance process – particularly those not in safe harbours.

      Pillar Two’s safe harbour provisions exempt firms from making detailed calculations in certain jurisdictions – i.e. those where existing tax reporting suggests a low risk of an ETR below 15%. Where safe harbours don’t apply, the full GloBE calculations and returns are necessary. This is especially important once new jurisdictions require FY25 filings, and the base ETR increases to 16%.

      Remember that your safe harbours may vary from year to year, depending on any significant changes to the business, such as reorganisations or transactions. So, the picture may evolve in terms of how much localisation is needed, and where.

      Getting ready for BEPS was a major data gathering and processing exercise. Firms had to identify which information they’d need; which functions and systems it sits in; and the most efficient way to collect and prepare it for Pillar Two compliance.

      Now’s the time to review and refine your data processes, and systematically capture:

      • what data was – and wasn’t – needed
      • the most efficient way to access it next year
      • the pain points – and how to address them
      • what to streamline and automate going forward

      Your Pillar Two compliance will form part of your next HMRC Business Risk Review. HMRC will want to understand how your Pillar Two data flows from its source systems through to the submitted filings.

      Now the first cycle is done, create a clear, detailed audit trail. Carefully document your Pillar Two systems, processes, roles and responsibilities, controls and governance measures. HMRC will expect you to have this in place.

      Start the year two cycle with the end in mind. Rather than working sequentially – data, calculation, filings – map out:

      • every jurisdiction where you have a Pillar Two reporting obligation
      • what needs doing in each one by the filing deadline
      • whether any structural changes to the group occurred in the period
      • whether the data reflecting these changes can be retained now – as that will be harder to do months down the line.

      Feed that into a master plan, setting out what should be done centrally and locally.

      A smoother path for year two

      The biggest lesson from the first filing season is that Pillar Two is no longer a technical tax project. It's an ongoing operational obligation, demanding global coordination, robust governance and high-quality data.

      Organisations that redesign their compliance model now will be far better positioned as reporting requirements expand and scrutiny increases.

      The question is no longer whether your organisation can file a Pillar Two return. It's whether it can do so efficiently, consistently and sustainably, year after year.

      KPMG’s tax experts can help. We have the technology and global infrastructure to drive central efficiencies while managing the necessary localisation. And we’re constantly abreast of the ever-changing rules.

      Thanks to our flexible delivery model, we can handle your Pillar Two compliance end-to-end. Or we can manage it alongside your team, or support them with our technology platform and technical input where needed.

      Get in touch to see how we can make your next Pillar Two cycle easier.

      Our tax insights

      Something went wrong

      Oops!! Something went wrong, please try again
      MTD

      Get in touch

      Discover why organisations across the UK trust KPMG to make the difference and how we can help you to do the same.

      Contact us