Global tax reform is coming—and CEOs need to be ready

For multinational corporations and their leaders, the introduction of new Pillar Two global minimum tax rules requires a new approach to data gathering, compliance, and fundamental business strategy.

Charles Slack

United States

Sweeping international tax reform is set to go into effect in 2024, and for multinational corporations, it’s about to get complicated.

To understand the global tax reform’s scope and impact, how organizations can prepare, and why C-suite executives well beyond the CFO should be engaged in their organizations’ response, Deloitte Insights spoke with six Deloitte tax and legal professionals who weighed in from around the world.

Why Pillar Two tax reform is a C-suite priority

The agreement, known in tax circles as Pillar Two, is extensive in its scope: It was signed by 138 countries representing 90% of global economic activity.1 And at its heart, it pursues a clear-cut and consequential goal: End the world’s “race to the bottom” in corporate tax rates, as US Treasury Secretary Janet Yellen described it in 2021.2

The reforms aim to level the playing field between countries by discouraging them from reducing their corporate income taxes to attract foreign business investment. Pillar Two’s remedy is to compel multinational enterprises with €750 million or more in annual revenue to pay a global minimum tax of 15% on income received in each country in which they operate. The work is being undertaken by the Organization for Economic Cooperation and Development’s Inclusive Framework (a wide-reaching network of more than 140 countries) and organized by the OECD’s Centre for Tax Policy and Administration.3 Estimates from the OECD suggest that Pillar Two could raise corporate taxes globally by US$220 billion per year, about 9% of global corporate income tax revenues.4

In a Deloitte Global survey of 300 senior tax and finance leaders at companies across a range of industries, sizes, and regions, 43% said complying with evolving tax laws and regulations around the world was their top challenge. Pillar Two, in particular, was top of mind.

But Pillar Two compliance is far more than just a task for tax departments to worry about. Boards, chief executives, and C-level leaders need to ensure that tax, accounting, and legal teams have the support they need to meet Pillar Two’s complex and far-reaching data collection and reporting mandates in a timely manner. At a more strategic level, they need to consider and plan for Pillar Two’s potential impact on everything from where the organization operates, to mergers and acquisitions strategy, to its supply chains. “The complexity is not to be underestimated,” says Amanda Tickel, global tax policy leader for Deloitte. “Leadership needs to be modeling what the impact is, what their response plan is, how they’re going to comply, and whether they have got enough resources.”

Preparing for imminent deadlines

For any organization that operates across borders, Pillar Two tax reform very much deserves a spot on the C-suite’s strategic agenda. It’s complex to implement, and financial reporting will be the first order of business. Pillar Two requires multinational enterprises to potentially provide more than 100 separate data points for each entity in the organization (some of which will not be collected for any other purpose currently). Varying start dates in different countries will add to the complexity in the early years, as a result of the interconnectedness of the rules.

With the first reforms in the first countries kicking in at the start of 2024, there’s no time to waste. “This means a lot of expense and a lot of hustling to get ready,” says Bob Stack, a managing director in Deloitte’s US tax practice and international tax group. “For a large organization, 2024 might as well be yesterday.” Yet according to Deloitte’s 2023 Global Tax Survey of multinational enterprises, 44% of respondents said their organizations have only done rudimentary modeling—at most—of the impact of Pillar Two on their tax profiles.5 Companies will also need to think about their financial reporting timelines for both year-end and interim periods (for quarterly reports, for example, by the end of the first fiscal or calendar quarter of 2024). “You’re going to have to quantify your Pillar Two taxes on a global basis,” says Chad Hungerford, Deloitte’s global Pillar Two leader. “For most companies, this isn’t a couple of weeks’ exercise to get ready. This is a several-month exercise.”

To help multinational organizations adapt to Pillar Two’s complexities, 2024 returns won’t be due until 18 months after the end of that year. Yet if mid-2026 feels like a long way off, organizations would be well advised to immediately begin “building the systems and infrastructure that allow you to capture the compliance data,” Hungerford says. “One of the truisms of financial data is if you don’t capture it in real time, oftentimes you don’t ever capture it.” To ease the compliance burden on companies, the OECD agreed to develop a set of temporary “safe harbors,” short-term measures that would effectively exclude some company operations in lower-risk jurisdictions from the scope of Pillar Two rules in the initial years.6 That said, businesses will still need to assess whether these rules apply, collect the necessary safe harbor data, and have a contingency plan for those countries where the safe harbor conditions aren’t met.

For CEOs, CFOs, and the board members that provide oversight, it’s not too early to start gauging Pillar Two’s impact on first quarter 2024 earnings, says Chris Roberge, the Hong Kong-based global leader for Deloitte’s integrated business solutions in tax and legal. “Be prepared for your upcoming earnings call,” he says. Multinational companies will be liable for so-called “top-up” taxes to bring their level up to the 15% threshold in every country where their effective rate is lower. “For some, there could be an earnings hit and a question the analysts ask,” Roberge says. “You need to engage with your financial statement auditor right now and ask: ‘Where are we in understanding the earnings impact of these rules? How are we going to disclose in our financial statements? And what is my response when analysts ask about the impact of Pillar Two on our business?’”

Moreover, political opposition to Pillar Two in some countries won’t offer immunity from its consequences to the companies based there, Hungerford says. Regardless of their home base, multinational enterprises will need to conform to the laws in every Pillar Two country in which they operate.

Managing data across the enterprise

A lion’s share of the compliance responsibility will, of course, fall on a multinational enterprise’s tax specialists. “Tax departments are going to have to apply a Pillar Two lens to everything they do,” says Alison Lobb, a London-based partner and international tax policy lead at Deloitte.

Yet given the magnitude of the changes, Pillar Two also requires deep involvement of other departments across the organization, as well as a heightened level of cross-business communication and cooperation, Lobb says. For example, accounting departments should be ready to provide detailed trial balance accounts, ownership-based data, transaction analysis, industry-specific information and more. Deloitte’s Global Tax Survey highlights the challenge: 68% of multinational enterprises surveyed are at least “somewhat confident” they’ll have the necessary tax and accounting data necessary to comply, which means nearly a third (32%) are not.7

Tax and legal departments need to provide detailed information on where individual entities are based, their legal form (for example, publicly traded entities, real estate investment trusts, or limited liability companies), what their assets and employment look like, and who their shareholders are. This information can be surprisingly elusive at the corporate level, says Rachel Hossack, partner and head of legal corporate reorganizations at Deloitte UK. “The French team knows what they have in France, the Spanish team knows what they’ve got in Spain, but headquarters may not have that data in one centralized place,” Hossack says. And even when they do collect the information, transferring it from one department to another may create significant hurdles.

Indeed, information technology departments should play a central role in automating and upgrading software, and ensure that data can travel seamlessly and in readily usable formats throughout the company. “A lot of tax departments are very spreadsheet-centric,” Hungerford says. With Pillar Two, “the calculations, and the data to support them, are at such a scale that companies aren’t going to look to do this manually.”

Initiatives that touch on so many different departments suggest the need for oversight, involvement, and guidance at the board and CEO level, Roberge says. Companies are busy reviewing their enterprise resource planning and other systems, and creating data inventories to gauge the level of the challenge ahead. “Maybe they’re fortunate, and with the way they’re set up, it’s not too bad,” Roberge says. “Others may have eight or nine different finance systems and non-finance systems from acquisitions of companies, and it’s going to be more difficult to pull all this together.”

Rethinking global strategies

There’s nothing new about countries offering favorable tax terms as a way of attracting international investment, of course. Yet an increasingly digitized global economy has made it easier for some organizations to serve one country from another, according to the OECD.

Pillar Two won’t affect all multinationals to the same degree, Stack says. For those whose operations are principally confined to higher-tax countries where they’re already paying above the new 15% global minimum tax, Pillar Two will amount mainly to a significant, new compliance lift. They’ll still have to document that they’re over 15% wherever they operate, using either the temporary safe harbor or the complex, new rules.

For multinationals with operations in low-tax countries, Pillar Two will have other consequences. “The tax rate is one of the considerations that may affect where and how a business chooses to operate,” Stack says. “It may be less desirable to set up operations in countries that were previously low-tax once Pillar Two is in place.”

The tax implications of M&A strategy is another area that might have to be reconsidered with Pillar Two in mind. At a basic level, consider a multinational enterprise currently exempt from Pillar Two because its revenue falls short of the €750 million threshold. If a significant acquisition might push revenue over the limit, the buyer will have to consider whether the strategic benefits of the acquisition justify the additional tax burden and compliance costs.

A company already over the threshold, meanwhile, will have to consider the impact that a target company’s tax profile may have on its own tax profile in each and every country where the acquired company operates. “If I’m acquiring a company that has low-taxed operations, from a Pillar Two perspective, that’s going to change my mix,” Hungerford says. Buying that low-tax company could put the buyer below the 15% minimum in certain countries, thus generating a significant top-up tax obligation. Post-acquisition decisions involving restructuring, divestiture, consolidation, and layoffs should likewise be carefully considered for Pillar Two tax implications, he says.

Adjusting to a Pillar Two world

Even with the first deadlines fast approaching, Pillar Two remains very much a work in progress. Companies, countries, and those who advise them are still coming to grips with evolving updates, requirements, and implications. Yet one thing seems clear: As the reforms mature, they could fundamentally alter the relationship between governments and multinational companies.

Countries that have traditionally used the carrot of low income taxes may have to rethink their development strategies to some extent. While Pillar Two prohibits incentives that simply mirror previous types of incentives they were offering, “there are lots of other levers that governments can pull,” Tickel notes. “They’re not going to stop trying to attract investment.”

In a larger sense, though, Pillar Two compels multinationals and their leadership to take a more strategic approach to taxes. Stack foresees more companies globally publishing formal tax strategies, a practice that’s already increasingly common in Europe, “so that everybody knows how you think about tax.”

According to Tickel, the reform underlines the need for recognition, at a board and CEO level, of the strategic role that tax departments play and, potentially, “a new and different response to tax structuring, compliance, accounting, and data gathering” across the organization. This isn’t just about tax reform, she says.  “This requires a new way of thinking.”


Charles Slack

United States


  1. Organization for Economic Cooperation and Development, “138 countries and jurisdictions agree historic milestone to implement global tax deal,” press release, July 12, 2023.

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  2. Wall Street Journal, “Yellen: Avoiding a Corporate Tax ‘Race to the Bottom,’” video featuring Janet Yellen, May 4, 2021.

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  3. Organization for Economic Cooperation and Development, “International collaboration to end tax avoidance,” accessed September 26, 2023.

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  4. Organization for Economic Cooperation and Development, “Revenue impact of international tax reform better than expected,” press release, January 18, 2023.

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  5. Deloitte, “Confidence in times of change: Tenth annual global survey of multinationals,” 2023.

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  6. Organization for Economic Cooperation and Development, Safe harbours and penalty relief: Global anti-base erosion rules (Pillar Two), 2022.

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  7. Deloitte, “Confidence in times of change.”

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Cover image by: Matt Lennert; Adobe Stock