As we approach the financial year-end in 2023, multinational corporations (“MNEs”) must prepare a disclosure related to Pillar 2 as outlined by the IAS Board. Be ready to present something to your auditors when requested during the year-end close.
Pillar 2 represents a major shift in international taxation. It brings a complex set of new rules and takes consolidated financial reporting as its starting point. MNEs must adapt to these changes and ensure compliance with the new regulations.
Don’t be surprised when your financial auditors ask you to what extent you have made a Pillar 2 analysis. This request is driven by recent changes to the International Financial Reporting Standards (IFRS) and International Accounting Standard 12 (IAS12). Based on these changes, multinational groups must prepare specific Pillar 2 disclosures for fiscal years beginning on or after January 1, 2023. These disclosures include:
- 88A: Disclosure of the application of the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.
- 88B: Separate disclosure of current tax expense (income) related to Pillar Two income taxes.
- 88C: Disclosure of known or reasonably estimable information when Pillar Two legislation is enacted but not yet in effect to help financial statement users understand the entity’s exposure to Pillar Two income taxes arising from that legislation.
- 88D: Qualitative and quantitative disclosure of exposure to Pillar Two income taxes at the end of the reporting period, which can be presented as an indicative range if specific information is unavailable.
The IFRS Foundation provides examples of the information that entities can disclose to meet these requirements. This includes both qualitative and quantitative information.
To assist multinational groups in complying with these FY23 IFRS disclosure requirements, TaxModel has developed a Pillar 2 Impact Analysis tool. This tool can be a valuable resource for organizations navigating the complexities of Pillar 2. If you also require support in populating your datapoints in our solution, we are able to assist as well.
Stay informed, stay compliant, and navigate the changing tax landscape with confidence.
How can TaxModel assist in achieving your Pillar 2 milestones?
Below is an overview of where TaxModel can assist you in achieving your Pillar 2 milestones.
Pillar 2 Impact Analysis
TaxModel’s Pillar 2 Impact Analysis Solution assists multinational groups in meeting the FY23 IFRS disclosure requirements. The solution helps deliver content for the IFRS / IAS12 disclosures for your FY23 year-end close.
TaxModel’s Pillar 2 Impact Analysis Solution is carefully designed based on the reviews and validations by our clients and their advisors, as well as our understanding of the latest publications by the OECD Pillar 2 GloBE Regulations, the GloBE Information Return, Transitional Safe Harbour rules, and the Administrative Guidance.
The Pillar 2 Impact Analysis Solution covers the core flow of the Transitional Safe Harbour Tests and the Top-Up Tax Calculations to meet the first IFRS Pillar 2 reporting requirement concerning FY23.
Embed Pillar 2 reporting into the tax reporting process
TaxProof offers a solution for easing tax accounting-related workflows for companies ranging from small to large-cap, while reducing the operational costs and risks. Replace complex Excel-based spreadsheets and manual labor with smart data collection, assessment, reporting and analytics features.
Manage your FY23 IFRS reporting obligations and remain compliant!