Pillar Two Year 2: reviewing your process for the next

The first Pillar Two filing cycle gave multinational tax teams a clearer understanding of what compliance requires in practice. It tested how effectively they could gather data, complete calculations, coordinate reviews and prepare returns across multiple jurisdictions.

For calendar-year groups whose first year within scope was FY2024, the standard GloBE Information Return (GIR) deadline for FY2025 is 31 March 2027. The filing window falls from 18 to 15 months after the year end, leaving just nine months between the first two deadlines. Local returns, notifications and payment dates need checking separately.

With less time between deadlines, where could changes to your process make the greatest difference? That may involve improving an existing process, bringing more work in-house or changing the technology supporting delivery.

Understanding where recurring work remains

Some Year 1 effort went into establishing data requirements, mappings and responsibilities. With those foundations in place, future cycles should be easier. However, rekeying figures between systems, reconciling workbook versions and reformatting outputs will continue to take time unless the way the work is done changes.

The source of that effort may not be obvious. A review that took longer than expected could have been held up by missing evidence or conflicting versions of a calculation. Difficulties preparing a return may have started with how the underlying data was organised.

Looking across collection, calculations, review and filing helps explain where work builds up. This gives you a clearer basis for deciding whether one stage needs improving or whether a more coordinated approach is needed across the process.

Reusing data across reporting obligations

Pillar Two draws on information used in country-by-country reporting (CbCR), tax provisioning and group reporting. When these processes operate separately, teams can find themselves collecting and preparing similar information several times.

Reusing relevant entity information, financial data and mappings can reduce repeated preparation, both across obligations and between reporting periods. Differences in definitions and adjustments still need to be understood and reconciled.

The practical benefit depends on what happens after information is collected. Where approved data can flow into calculations and reporting, fewer manual transfers are needed. Where it must be copied into separate templates, much of the effort remains.

Connecting calculations with review and evidence

The FY2025 workload may differ from FY2024 as group structures and applicable requirements change. Safe harbour eligibility also needs reassessing, and qualifying does not remove all GIR reporting requirements.

Where full calculations are needed, the process must support the relevant GloBE adjustments, QDMTT, IIR and UTPR requirements. Maintaining that logic is part of the ongoing compliance workload, whether calculations sit in internal models, software or adviser workpapers.

Alongside consistent calculations, reviewers need to understand how results were reached. Connecting source data, adjustments, technical positions and approvals makes it easier to investigate differences and explain reported figures.

Validation also needs to be understood. Checking that XML meets the required structure serves a different purpose from checking underlying data and calculations. Clear checks and review responsibilities help specialists focus on matters requiring technical judgement.

Balancing internal delivery and specialist support

Year 1 may have clarified which activities the team could manage internally and where specialist advice remains valuable. Routine preparation and repeatable calculations may be suitable to bring in-house, while complex interpretations and specialist review may continue to involve advisers.

The approach should allow teams to take on more work over time while retaining access to advice where needed. As responsibilities change, the support available throughout the annual cycle becomes an important consideration.

When assessing a provider, consider its Pillar Two expertise, experience in tax calculations and electronic filing, and the implementation and ongoing support your team will receive.

Retaining the knowledge and evidence from Year 1

Any change should preserve the information behind the first filing, including source data, calculation workpapers, elections and technical positions. These may be needed for subsequent calculations or to explain an earlier result.

Where advisers managed Year 1, responsibilities for sharing information and transferring work need to be agreed. Teams changing an internal process or software also need continued access to existing records.

Allowing time to test the revised approach and resolve differences before relying on it for FY2025 helps retain the value of work already completed.

Building a more sustainable annual process

The first filing provides a practical basis for assessing change. The business case should account for internal time, specialist support, technology and rework, alongside better visibility and control.

The strongest approach will reduce repeated preparation, make calculations easier to review and keep evidence accessible. Use these measures to assess whether a change will make Year 2, and future compliance cycles, more manageable.

Preparing for your next Pillar Two filing cycle? Discover how Alphatax Pillar Two can support your compliance process and discuss your requirements with our team.