Wolters Kluwer report reveals BEPS Pillar Two compliance trends

Wolters Kluwer has released its Q2 2024 BEPS Pillar Two Readiness Index Report, a survey that assesses the readiness of multinational enterprises (MNEs) in adhering to the OECD's Base Erosion and Profit Shifting (BEPS) Pillar Two regulations.

The regulations mandate a global minimum effective tax rate of 15% for MNEs with consolidated global revenue exceeding €750 million.

The report indicates significant progress among MNEs, with 88% having commenced their BEPS Pillar Two compliance journey, an 18% increase from the previous quarter. Notably, 27% of these organisations are in the final stages of implementing relevant data and operational models.

Challenges remain, particularly in data collection, as expressed by 76% of respondents who find this aspect complicated. This concern has grown by 6% compared to the previous quarter. Legislative adaptation challenges are also prominent, with 93% of respondents identifying "Adapting to changing legislation and local requirements" as a primary challenge for global collaboration.

Approximately one-third of the responding organisations (33%) are exploring technological solutions to meet these new requirements, reflecting a shift in priorities from understanding legislative complexities to adapting operational procedures.

The report identifies an uptick in proactive measures, with 83% of enterprises having conducted preliminary impact assessment studies. This step aligns with their overall efforts to comply with the BEPS Pillar Two regulations.

Data management remains a significant concern, with confidence in current tax technology and data systems decreasing. None of the respondents expressed high confidence in their current systems' capabilities to handle BEPS Pillar Two requirements. Consequently, many are turning to new technology solutions to better manage data and compliance issues.

Despite these challenges, there is a growing recognition among organisations regarding the opportunities presented by BEPS Pillar Two. These opportunities include improving processes, leveraging data and technology, driving operational improvements, and strengthening risk management.

As the effective date for BEPS Pillar Two approaches, the emphasis is now on intensifying preparation efforts. Proactive planning, strategic investments in technology, and enhanced global collaboration are deemed essential for achieving compliance.

The BEPS Pillar Two Readiness Index Report by Wolters Kluwer provides valuable insights for organisations navigating the complexities associated with BEPS Pillar Two. For further details, the full report is accessible through Wolters Kluwer's communication channels.