Pillar Two reporting

HMRC has now fully enacted the Organisation for Economic Co-operation and Development (OECD) Pillar Two global minimum corporate tax rules. These rules are intended to ensure that large multinational enterprises pay a minimum level of tax across the jurisdictions in which they operate. Before questioning your sanity about another tax requirement Pillar Two will only impact groups with an annual revenue exceeding €750 Million for 2 of the last 4 accounting periods.

If you believe you are part of a group that will be required to report under Pillar Two, we recommend that you engage with the wider group to confirm reporting responsibilities. Where we are seeing an impact of this on our client base is companies that form part of larger groups. In particular this is impacting subsidiaries of US companies as of yet the US has not committed to enter into Pillar Two reporting. As a result, the UK entity may be required to act as the designated reporting entity for the group.

If your entity is the designated reporting entity, you will need to register with HMRC online using your government gateway. You will then need to begin gathering information to complete the GloBE* Information Return (GIR) being the standardised, comprehensive reporting document required under the OECD’s Pillar Two global minimum tax framework.

It is worth noting that, in some cases, no additional tax liability may arise for example, where an entirely UK-based group exceeds the revenue threshold corporation tax should have been paid above the minimum level. However, the reporting obligations will still apply and the compliance burden is complex with numerous data points which may not currently being tracked.

FRS 102 has been updated for the disclosures required where the Pillar Two is applicable and we are able to assist you to update your financial statements accordingly.

If you anticipate that you will be subject to Pillar Two reporting requirements and require assistance with the tax calculations, please contact us and we will be happy to connect you with the appropriate specialists.

*Global Anti-Base Erosion

If you need assistance in this area, please contact Alex Olney using the details below.