1. Understand the fundamental change
Pillar Two introduces a jurisdictional-level minimum tax of 15%. Unlike traditional corporate income tax regimes, which rely on statutory rates applied to taxable income, Pillar Two requires companies to calculate effective tax rates under new rules, based on Global Anti-Base Erosion (GloBE) income and adjusted covered taxes.
This change forces companies to think differently about how they manage data and reporting. Instead of the widely common historical income tax system of “one entity, one tax,” companies now must determine tax obligations on a jurisdictional basis, aggregating the result of all group entities operating in a jurisdiction. That means reorganizing responsibilities, processes and systems to capture data consistently across multiple entities (business units, systems, teams, etc.) within the same jurisdiction.
Businesses can no longer rely solely on traditional tax calculation and compliance approaches, entity by entity. They need models capable of compiling and analyzing data in new ways, while ensuring accuracy across group GAAP, local GAAP and the Pillar Two rules.
2. Assess the real impact
All groups subject to global minimum taxes face a significant new tax compliance obligation requiring extensive reporting on their group legal organizations, global and local operations and jurisdictional tax calculations.
Companies must move quickly to understand where they fall on this spectrum. A thorough impact assessment should determine:
- Which jurisdictions create liability
- The magnitude of top-up tax exposure
- Where compliance is purely administrative versus financially significant
Insights from the EY Tax and Finance Operations survey show that businesses are already modelling these outcomes. But effective assessment requires not only technical analysis — it also demands executive-level communication and coordination across multiple business functions. Boards and senior leadership want to know not just where minimum taxes will rise, but what it means for strategic decisions, including investment, capital allocation and supply chain planning. Operationally, tax, accounting, finance, technology, treasury and other teams must understand the scope of the minimum taxes and the demands the minimum tax puts on data, people, processes, systems and controls.
3. Build a scalable operating model
Managing Pillar Two is not a one-off project — it’s an enduring requirement. Companies must establish new operating models that bring together people, processes, systems and governance to deliver compliance reliably, year after year.
An effective operating model includes clarity on roles across tax, finance, IT, internal audit and other business functions between entities and business units and within jurisdictions. The tax function often leads on Pillar Two compliance and reporting, but finance is responsible for much of the underlying data, and IT may need to adapt systems or integrate new vendor technology to enable tax provision and compliance calculations and reporting. A cross-functional approach can facilitate the integrated flow of data, enable controls to be applied consistently and ensure compliance is not siloed within the tax function.
Governance is critical to sustained success. Effective operating models include strong oversight, internal controls and audit readiness. Without strong governance, companies risk inaccuracies, delays, or reputational damage.
4. Invest in the right technology
Traditional tax compliance and reporting tools are not designed for the GloBE framework as calculating effective tax rates based on Pillar Two rules across multiple entities within a jurisdiction requires new capabilities.
Companies face a choice: build in-house solutions, implement vendor platforms, or work with advisors who can provide technology-enabled services. The decision depends on business size, complexity and existing systems.
Key factors in the decision are flexibility and scalability. As legislation evolves, companies must be able to update calculations, manage data at scale and adapt quickly. Technology investment is not just about automation — it is about resilience in the face of evolving global requirements. Additionally, technology alone is not a solution. The value of technology investment is realized and sustained only when technology is integrated properly with data, people and processes.
5. Strengthen data management
Accurate, accessible, and traceable data is the foundation of Pillar Two compliance. Yet many organizations still struggle with fragmented systems, inconsistent data formats and manual data-related processes.
Companies need to align group and local reporting, reconcile different accounting standards, prepare for disclosures under multiple filing regimes and enable tax compliance under local tax rules. Achieving success requires data architecture designed for transparency and repeatability.
A best-practice approach treats data management as a strategic asset. Tax leaders should work with accounting, finance and IT to establish processes that ensure data quality, integrate with existing financial systems and allow for forecasting and scenario modelling.
6. Align stakeholders across the business
Pillar Two is more than a tax issue. Accounting, finance, IT, treasury, internal audit and even investor relations all have roles to play. Coordination across these groups enables process efficiency and consistency of internal and external communications.
Cross-functional alignment helps organizations manage compliance while also addressing broader implications. For example:
- Accounting and finance teams need to provide data for the global minimum tax calculations and need to incorporate Pillar Two into tax provisioning for group and statutory reporting.
- IT teams need to support technology integration and data management.
- Audit and controls teams ensure processes and controls appropriate management risk.
- Investor relations teams need clear narratives for public disclosures on the impact of the global minimum tax.
By treating Pillar Two as an enterprise-wide priority, companies can move beyond compliance to unlock insights that improve broader decision-making.
7. Prepare for uncertainty and change
Despite the adoption of Pillar Two global minimum taxes in many jurisdictions, challenges and uncertainties remain. The OECD continues to address a variety of technical issues in the Model Rules, having issued multiple rounds of Administrative Guidance and intending to issue additional guidance in the future. Several jurisdictions, including the US, China and India, have not enacted Pillar Two into local law. Not all jurisdictions that have enacted Pillar Two into local law have enacted the full OECD global minimum tax framework, and many jurisdictions that have enacted Pillar Two into local law have enacted nuanced variations of the OECD framework. In the absence of clarity and consistency, companies must make best efforts to interpret laws as enacted.
In addition to technical uncertainty, many jurisdictions that have enacted Pillar Two into law have not yet published local compliance and reporting requirements. With filing deadlines looming, companies must remain flexible to adapt quickly to reporting requirements when published.
Companies must accept that Pillar Two will evolve. Companies should monitor legislative and policy developments and prepare compliance processes that are flexible and adaptable. The priority is not to wait for full clarity but to build readiness now. With tax compliance deadlines approaching, delaying preparation could increase costs, create risks of noncompliance, or leave businesses unprepared for top-up tax obligations.
The path forward
The implementation of Pillar Two is a watershed moment for international taxation. For many companies, it represents the most significant change in decades — not only introducing new tax liabilities but also reshaping how tax, finance, and technology functions interact.
The points outlined above provide a plan for action. By understanding the fundamental change, assessing its impact, building a sustainable operating model, investing in technology, strengthening data management, aligning stakeholders and preparing for uncertainty, companies can meet compliance requirements while balancing investment constraints and other strategic priorities.
Ultimately, readiness is not about minimizing exposure – it is about managing obligations in a way that builds resilience, enables transparency and positions the business to thrive in a new global tax environment.
Summary
Pillar Two’s global minimum tax is reshaping how multinational businesses manage compliance, data and governance. The seven essential actions outlined here provide a practical framework for turning regulatory pressure into an opportunity to strengthen resilience, improve cross-functional collaboration and position organizations for long-term success in an evolving tax landscape.
