In 2024, many public and private companies will be required to comply with the global minimum tax requirements outlined in OECD Pillar Two. While the Pillar Two guidelines will likely result in tax impacts for all multinational entities that meet certain revenue thresholds, compliance will involve more than just the corporate tax department—including the need to create a new set of standalone financial data across all relevant jurisdictions. Plus, certain audit firms have begun to release detailed practical application guidance, including Pillar Two readiness assessment procedures and timing considerations. In response, CFOs and controllers should establish an approach now to anticipate financial reporting requirements and auditor expectations in a timely and comprehensive manner.

The global minimum tax is expected to affect many functions at multinational enterprises, and it’s essential to prepare proactively to avoid issues in the first quarter of the year and beyond. For public companies, Pillar Two compliance will involve calculating and recording quarterly tax expense and relevant disclosures starting in the first quarter of 2024, so it will be important for corporate finance and accounting teams to accurately capture standalone financial data and understand the tax liability across all relevant jurisdictions as soon as possible. Private companies subject to Pillar Two will need to determine their estimated annual tax liability in Q1 2024 in order for tax payments to be accurate and avoid underpayment penalties. In addition, private companies will be required to comply with annual reporting requirements.

The checklist below outlines how accounting and financial reporting professionals can help their organization get ready for Pillar Two compliance.