Is my group even in scope for the global minimum tax?
That is a revenue test applied to the consolidated accounts of the group, not to any one company's tax return, so the answer comes from the group's financial statements rather than from its filings. Two things follow. A group that assumes it is too small should check the consolidated figure rather than the parent's, because the consolidation includes entities that may never have been looked at together before. And a group near the line has to test it period by period, since moving in and out of scope is possible. We start a readiness engagement with that test and put the result in writing.
What data do we need to collect for a Pillar Two readiness assessment?
More than a tax return produces. The rules operate on effective tax rates computed jurisdiction by jurisdiction from adjusted accounting data, so the inputs are accounting figures with defined adjustments applied, grouped by country rather than by entity. In practice that means a complete list of constituent entities, a reliable mapping from each entity's accounts into the group's consolidation, and the current and deferred tax figures behind each. Most of the effort in a first assessment goes into establishing that mapping, not into the computation itself.
Why can our tax returns not tell us our effective rate by country?
Because no existing tax return produces that computation. A return reports one entity's taxable income under one country's rules for one period. The minimum tax rules ask a different question: what is the group's effective rate in a jurisdiction, across every constituent entity there, measured on adjusted accounting profit. The two use different starting figures, different adjustments and different groupings. A readiness assessment is largely the work of building the second computation out of data that was collected for the first.
Which of our companies count as constituent entities?
The group's consolidation decides that rather than its organisation chart, which is why the first step is a reconciliation of the two. Entities sitting in the consolidated accounts are in the population, including ones the tax function has never dealt with because they file locally and separately, and including holding and dormant companies. Joint arrangements and permanent establishments need their own treatment. We produce the entity list as a schedule naming each entity, its jurisdiction and the basis on which it is included, because every later computation is grouped from it.
Do we need to do anything if every country we operate in taxes above the minimum?
Probably yes, because that conclusion has to be demonstrated rather than assumed. The test runs on the effective rate computed under the rules from adjusted accounting data, not on the headline rate in the statute, and a jurisdiction with a high headline rate can compute below the minimum through timing differences or a local incentive. A readiness assessment that ends with every jurisdiction above the line is a good outcome, but it is an outcome supported by a computation you can show to a board or a tax authority.
How long does a first Pillar Two readiness assessment take?
Longer than the computation suggests, because this is a data exercise before it is a tax one. The time goes into identifying the constituent entities, agreeing where each accounting figure will come from each period, and resolving the entities whose local accounts do not map cleanly into the consolidation. Once that is settled, the jurisdictional testing is comparatively quick and can be repeated each period. We scope it as two phases for that reason, and the fee for each phase is agreed in writing before it starts.
What is OECD Pillar One?
The part of the international agreement that reallocates a share of taxing rights over the very largest and most profitable groups to the jurisdictions where their customers and users are, regardless of physical presence — plus a simplified approach to routine marketing and distribution returns. It is aimed at the digitalised economy problem that physical-presence rules could not reach, and its implementation is still moving, which is why we read the current instrument rather than the original blueprint. See BEPS and Pillar Two.
Do I need to report a foreign business I own?
Almost certainly, and on more than one form. Canada requires reporting of foreign affiliates on the T1134; the United States has a family of returns keyed to the entity type and your level of control, and several carry penalties that apply whether or not any tax is owed. These are information returns, so the obligation follows the ownership rather than the profit. See T1134.
