Pillar Two readiness assessment — is this a do-it-yourself job?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: readiness is a data problem first: identifying constituent entities, mapping accounting data to the required adjustments, and testing which jurisdictions fall below the minimum.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
How do I know if the global minimum tax applies to my group?
Scope is tested at group level against the consolidated accounts, not entity by entity and not on taxable profit. That matters, because a group can be well within scope while every individual company in it looks small. The test is a revenue one applied to the consolidated figures, so the first step is to establish what the consolidation actually contains, including entities finance treats as immaterial and entities acquired partway through a year. Groups near the line should document the test each year rather than concluding once, because a single acquisition can change the answer.
Why can't our tax return tell us our effective tax rate?
Because the rules ask a different question from the one a tax return answers. A return computes a liability for one company under one country's law. These rules compute a rate for a whole jurisdiction, combining every group entity there, using accounting figures adjusted in ways the local return never applies. Deferred tax is brought in, certain items are excluded, and the result is a jurisdictional rate that no existing filing produces and no accounting system reports as standard. That is why readiness is a data exercise before it is a tax exercise.
Which companies count as part of the group for these rules?
Everything consolidated, which is usually a wider set than the tax team works with day to day. Dormant companies, entities held for sale, partnerships, branches and joint arrangements each need to be looked at rather than assumed out, and a branch is treated separately from the entity it belongs to. Groups routinely find the list is longer than the one used for tax compliance, because tax reporting tends to follow where returns are filed. Build the constituent entity list from the consolidation, then reconcile it to the compliance list and explain every difference.
One of our countries is below the minimum rate, so what happens?
A shortfall in a jurisdiction is charged somewhere in the group, and which jurisdiction collects it depends on the order the rules apply in and on what each country has enacted. The practical points come earlier than that. First, a low rate is often a timing difference rather than a low-tax country: accelerated relief or a loss carried forward can drop a rate in one year without anything unusual happening. Second, the answer moves with the adjustments applied. Identify why a jurisdiction is low before assuming a charge arises from it.
What data should we collect before these rules apply to us?
Start with the things that take longest to build. A complete constituent entity list tied to the consolidation. Accounting figures per entity on a consistent basis, including the deferred tax detail, which is often held only at group level. The ownership chain, including partial holdings. And a record of which jurisdiction each entity is treated as located in. Most groups find the gaps sit in local accounting detail that never travelled up to the consolidation, and in entities reported through a shared service centre. Finding those gaps is the whole point of a readiness exercise.
We already consolidate our accounts, so is that enough for this?
It is the right starting point and it is not sufficient. A consolidation is prepared to present group results. These rules need figures per entity and per jurisdiction, before elimination, on a basis that can then be adjusted. Groups frequently discover that the underlying entity data behind the consolidation is summarised, held in different charts of accounts, or restated only at group level. The consolidation tells you who is in scope. It rarely tells you, without further work, what each jurisdiction's rate actually is.
Can you give a plain transfer pricing example?
A Canadian company manufactures at a cost of one hundred and its US subsidiary sells to customers for one hundred and eighty. If the parent invoices the subsidiary at one hundred and ten, most of the margin is taxed in the United States; invoice at one hundred and seventy and most of it is taxed in Canada. Nothing about the business changed — only which treasury collects. That is why the arm's length price, the one unrelated parties would have agreed, is the reference point both authorities use. See our transfer pricing work.
Should I use a branch or a subsidiary abroad?
A branch is the same legal entity operating in another country, so its profits and losses sit with the parent and it is taxed there as a permanent establishment. A subsidiary is a separate company, taxed in its own right, with dividends and withholding on the way home. Losses, repatriation cost and liability usually decide it, and the answer differs by country pair. See branch vs subsidiary.
