With the introduction of the BEPS Pillar II regulations, businesses globally face a new set of compliance challenges. For major multinationals Pillar II compliance is now required and will mean a significant data challenge across jurisdictions. However, it also provides a unique opportunity to rethink and enhance existing processes and leverage advanced systems to meet the compliance burden and drive efficiency. Organisations that have completed their initial Pillar II impact assessments now face a critical next step: preparing systems and processes to support timely, accurate compliance with the first filings due in 2025. At Praesto Consulting we can help to design and implement solutions to ensure compliance ahead of upcoming deadlines.
Pillar II introduces a new level of complexity in tax reporting, requiring the collection, alignment, and transformation of over 150 data points per entity, many of which will not exist in current systems. This data must be extracted from diverse systems, processed in accordance with jurisdictional rules, and integrated into a coherent reporting structure. For many organisations, existing processes and systems are not equipped to handle this level of additional data collation and wrangling, especially not manually.
Why Manual Processes Are a Risk
A key consideration for many in the initial implementation will be the utilisation of the transitional safe harbour. To benefit, organisations require a qualifying Country-by-Country Report. Data used in the safe harbour calculations must be derived from the same qualified financial statements. With many processes currently completed manually without systems and clear controls, it makes it hard to ensure consistency and demonstrate robust controls. Enhancements in systems and processes are therefore required to ensure that the safe harbours are available.
Beyond the safe harbours, the large and granular dataset required for calculation is likely to span various systems, requiring significant time and effort to collect and reconcile. Most multinationals will have thousands of data points in total. Relying on manual processes with this volume of data increases the risk of delays, errors and complicates audit trails. Given the challenges of managing the volume and complexity of information required under the legislation, automation is not optional, it is critical.
Building an Automated Compliance Process
To meet Pillar II requirements confidently, automation must be at the core of your solution. This requires more than just a tax engine; it’s about creating an integrated, end-to-end system that connects tax, finance, and IT functions effectively.
As a minimum, an effective Pillar II system should:
- Combine data from multiple source systems (not just ERP)
- Automate calculations at the jurisdictional level
- Maintain an audit trail across all data transformations
- Support future regulatory updates and expanding reporting demands
Act Now: Assess Your System Readiness
With the first filing deadlines approaching, the time to act is now. Companies in scope should begin by assessing the readiness of their systems to support Pillar II. This means understanding where data sits today, how it needs to flow through your systems, and where automation and integration could be applied.
At Praesto Consulting, we help organisations design and implement scalable Pillar II solutions tailored to their systems and processes. As a first step, we offer a Pillar II Data Readiness Assessment along with our proprietary Pillar II Data Readiness Workbook, which is a practical tool to help identify gaps and inform your roadmap to compliance.
Get in Touch
If your organisation is in-scope for Pillar II and preparing for compliance, now is the time to assess your technology readiness. Contact us today to for assistance assessing your current readiness and to hear about what tools are available for Pillar II compliance from our tax and systems specialists.