Shifting gears to develop a proactive BEPS 2.0 approach

A change in focus leads to informative insights on the implications of Pillar Two for one tech company.

An EY team developed a strong global relationship with a tech company, with EY professionals engaged in a value chain analysis addressing the company’s global structure and global tax controversy profile. But with Pillar Two global minimum tax developments underway, it was time to switch gears.

BEPS 2.0 Pillar Two impacts and preparation eventually became the project’s main focus. In addition, the situation provided an educational opportunity for many stakeholders.

▉ The issue

Unfamiliar with the details of the BEPS 2.0 proposals at the time, the tech company hadn’t started to consider Pillar Two impacts. However, the company was looking to assess its global tax posture from an efficiency and controversy perspective.

▉ The EY approach

Collaborating with a trusted non-US tax advisory team of EY professionals enabled the main EY team on the engagement to integrate BEPS 2.0 Pillar Two services to the value chain analysis work.

In addition, the EY team discussed ways they could further advise the tech company from a Pillar Two standpoint, such as helping the client develop their analysis and implement their approach.

▉ The outcome

The EY team’s Pillar Two impact assessment revealed potential impacts in jurisdictions that surprised the tech company’s executives. Equipped with this new knowledge, leadership was able to consider what the implications were from a process standpoint.

Previously, Pillar Two compliance had been considered more of an international tax topic. Through the EY assessment, the company — including its compliance and reporting team — learned that Pillar Two was also a tax compliance issue involving tax reporting matters from a US GAAP perspective.

With an informed picture of Pillar Two and its impacts, the tech company was positioned to proactively plan its next moves amid emerging Pillar Two developments.