The Pillar Two rules will go into effect at the beginning of 2024 and time is quickly running out for multinationals to determine the impact. One of the most challenging and time-consuming aspects of Pillar Two is the calculation of the Globe Effective Tax Rate.
In this episode, KPMG Department of Professional Practice partner Nick Tricarichi is joined by Quyen Huynh, KPMG Washington National Tax principal, to break down the calculation of the Globe ETR into simple terms. We explain why it’s so challenging, provide examples of major adjustments that need to be made to the financial statements, and dive into how companies are attempting to close the extensive data gap.
Lastly, we close the episode by asking Quyen to put on her coaching hat and provide some practical tips on what companies can do now to make this process more manageable.
- Multinational companies with consolidated revenues of at least €750M
- 2023 year-end reporting – Evaluate whether existing SEC rules require disclosure of the potential effects of Pillar Two
- January 1, 2024 – Pillar Two rules begin to go into effect
- Q1 2024 reporting – Account for the effects of Pillar Two in the interim tax provision
- 00:15 – Introduction
- 02:25– Why is the Globe ETR calculation so challenging?
- 05:20 – How the rules may continue to evolve
- 07:05 – Examples of major adjustments in calculating Covered Taxes
- 09:05 – Examples of major adjustments in calculating Globe Income
- 13:30 – How companies are tackling the data challenge
- 16:15 – Coach’s Corner: practical implementation advice