As the Organisation for Economic Co-operation and Development (OECD) Pillar Two global minimum tax framework evolves from implementation to execution, companies around the world are facing a shift in how multinational tax obligations are calculated, reported, and managed. Simply put, Pillar Two compliance has created one of the most significant data challenges tax departments have faced to date. While the GloBE Information Return (GIR) filing deadline was a difficult but manageable milestone for many U.S.-headquartered multinational enterprises, the next phase poses a deeper set of data collection concerns. As more jurisdictions are onboarding to this framework and reporting expectations expand, companies should expect the need for additional data to become significant and real for 2025 reporting and beyond. This challenge poses a new opportunity for companies to drive data and financial reporting automation.
“Pillar Two can be the leverage companies need to drive data automation and financial reporting automation across the organization.”
- Eric Flueckiger, Partner
The Operating Challenges of Pillar Two Data Gaps
Why ERP Systems May Fall Short for Pillar Two Compliance
The global minimum tax regimes require entity-level and jurisdiction-level data that most enterprise resource planning (ERP) systems were never designed to produce. The gap isn’t knowledge, but infrastructure. Many companies already have the tools they need; the issue is that those tools are not connected to the data they need, when they need it. This gap often begins with system fragmentation. To illustrate this point: even companies with a global ERP may still have branches or miscellaneous jurisdictions maintaining financials in Excel, while others may operate different ERPs by business segment or geography. As a result, Pillar Two reporting can potentially require blending ERP outputs, spreadsheets, multiple currencies, and data from myriad systems.
Navigating Pillar Two Reporting Requirements
Companies made it through the GIR filing, but the next filing cycle is expected to require more information, especially for U.S.-headquartered multinational enterprises. That shift creates pressure on tax departments that may not have the people, time, or systems needed to gather, normalize, and report the required information efficiently. Pillar Two model rules are exposing data gaps that were easier to tolerate under more linear tax processes. Historically, a tax team might gather one set of data for a property tax return, another for an income tax return, another for a local country filing, and another for sales and use tax. Pillar Two changes that model because the data used for transfer pricing, income tax, audited financial statements, and top-up tax calculations must increasingly tie together.
The issue is not simply whether tax teams understand the new rules. The bigger challenge is how to meet a recurring compliance obligation without building an entirely new team or relying indefinitely on manual support. For this purpose, automation is critical. Many organizations have viewed Pillar Two compliance as an exercise that has not necessarily resulted in significant additional tax, but has consumed resources through internal time, people, and third-party service provider fees. That makes the data gap both a compliance issue and a resource issue.
The Limitation of SbS Relief
Filing Obligations Under Pillar Two SbS Relief
While U.S.-headquartered multinational enterprise groups may believe the side-by-side (SbS) agreement will eliminate the need to focus on Pillar Two, there may still be some Pillar Two-related compliance requirements they need to address. Though the agreement is expected to relieve a significant amount of potential Pillar Two top-up tax beginning with tax years that start January 1, 2026, it does not relieve U.S.-headquartered multinational enterprises from filing returns related to Pillar Two or from paying minimum tax in jurisdictions that have implemented a qualified domestic minimum top-up tax.
In practical terms, SbS may change the shape of the obligation, but it does not eliminate it. If a business operates in a jurisdiction with a minimum tax, it must still comply with that jurisdiction’s law, regardless of whether the parent company is headquartered in the U.S. or elsewhere—a minimum tax is a minimum tax.
Tax teams often operate under immediate deadline pressure, but that short-term mindset is potentially a strategic miscalculation for Pillar Two. Companies need to proactively anticipate the long-term data, reporting, and compliance implications now, rather than waiting until relief periods narrow or expire. In a potential future scenario, governments may not simply ask companies to report a liability, but may request access to data tables and calculate exposure themselves. If that happens, tax teams will need the ability to understand, explain, and defend the data underlying their positions. Relief may help companies manage an initial compliance burden, but it should not delay the development of a durable data foundation.
Defensibility Starts With a Repeatable Process
Creating a Defensible Pillar Two Compliance Process
Companies need a process they can repeat, scale, and explain. The first year involved learning by taxpayers and taxing jurisdictions alike. But as Pillar Two requirements do not go away, companies will need a way to keep the obligation from overwhelming tax directors, CFOs, and tax departments.
“Proactive and meaningful data practices can help prevent controversy. The fewer differences you have to defend in controversy, the better off you’ll be—especially as more jurisdictions search for tax dollars and may try to tax the same dollar already taxed elsewhere.”
- Chris Kavanaugh, Managing Director
Biweekly or weekly meetings to prepare for a deadline may be manageable during an initial filing year, when everyone is learning, but they are difficult to sustain as a permanent operating model. Defensibility, then, depends not only on reaching an answer, but on creating a more reliable way to support the answer with consistent data, documented processes, and coordinated execution.
This represents a shift away from linear tax processes to a more connected, three-dimensional model. The data used for a transfer pricing report, the balance sheet for an income tax report, and financial statements used for Pillar Two top-up tax need to tie and reconcile. Where they do not, companies may face controversy risk—which may be heightened because jurisdictions may be competing over the same tax dollars. Local country regimes can seek to bring taxpayers up to a minimum local country tax level before global rules apply. In that environment, companies need to be clear about how amounts are reported, where they are reported, and how the same data ties across filings. Small differences can arise when teams pull the same month’s data at different times or from different starting points, especially when topside adjustments, eliminations, or other nuances have changed. The fewer differences a company has to explain in controversy, the stronger its position may be.
Pillar Two Compliance Scales With Data & Process Automation
Data Governance & Process Automation for Pillar Two Compliance
Companies that continue to treat Pillar Two taxation as a one-time filing project may miss a broader opportunity: navigating Pillar Two compliance as leverage to improve tax, financial reporting, and enterprise data processes. Data process and automation will be critical to simplifying the compliance obligation for the next stage of Pillar Two.
That configuration change is important because many U.S.-headquartered multinational enterprises were hesitant to invest heavily in Pillar Two transformation for the first filing. Many wanted “bare bones support” to meet the filing obligation and move on. But as the compliance burden continues, automation can help reduce recurring strain while creating data that is available in real time and useful for other purposes across the organization.
Advancing Tax Transformation Through Pillar Two Compliance
Pillar Two should be viewed as a tailwind rather than a headwind; that is, an opportunity to change how tax organizations operate. If companies invest in a single governed starting point that agrees back to audited financial reports, they can improve more than Pillar Two compliance. The same data needed for Pillar Two is often the same data needed for other tax reporting, provision, planning, and compliance processes.
Scalable governance reduces repeated requests and disconnected workflows. This foundation also matters for emerging AI capabilities: before tax teams can benefit from AI, they need reliable, accessible, well-governed data.
How Forvis Mazars Can Help With Data Collection for Pillar Two Compliance
For U.S.-headquartered global enterprises, the goal is to create a process that reduces manual effort, supports compliance across jurisdictions, and turns Pillar Two data into a broader transformation opportunity. Companies preparing for 2025 reporting and future compliance cycles should evaluate where manual work, fragmented data, and limited automation are creating risk—and consider how a coordinated tax and transformation approach can help them build a more sustainable path forward.
At Forvis Mazars, we redefine collaboration and provide insights to help you prepare for what’s next. Combining global reach with local knowledge, our international tax team can help your company move from reactive compliance to a more scalable Pillar Two operating model. For more information, see our Pillar Two International Compliance services or reach out to a professional at Forvis Mazars for a Pillar Two Assessment (P2A) consultation.