Managing Pillar Two data using ONESOURCE Tax provision and Orbitax

The global tax landscape is undergoing a significant transformation with Pillar Two, presenting substantial challenges for corporate tax professionals. Navigating these new international tax rules demands more than just diligence; it requires sophisticated technology. This article explores the complexities Pillar Two introduces and how technology solutions, particularly  Orbitax GMT and ONESOURCE Tax Provision, can empower tax teams to manage these effectively.

Pillar Two’s key hurdles for tax professionals

The implementation of Pillar Two brings forth several considerable challenges: 

1. Heightened complexity and compliance demands: Pillar Two’s new rules significantly escalate the complexity of tax compliance. Professionals must decipher intricate local tax laws and their interplay with overarching Pillar Two regulations, which vary considerably across jurisdictions. 
2. Vast data requirements: The sheer volume and granularity of data needed for Pillar Two compliance are unprecedented. Collecting and managing extensive financial and tax data accurately becomes a monumental task, increasing the risk of errors. 
3. Dynamic regulatory landscape: The tax environment is in constant flux, with frequent updates to Pillar Two rules and interpretive guidance. Continuous monitoring and swift adaptation are crucial for maintaining compliance. 
4. Strain on tax provision processes: The added layers of complexity and data necessitate more time and resources for completing tax provisions. This can delay financial reporting and elevate audit risks. 

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Leveraging ONESOURCE Tax Provision and Orbitax GMT technology to navigate Pillar Two 

To confront these hurdles, corporate tax professionals are increasingly relying on advanced technology. Orbitax GMT and ONESOURCE Tax Provision from Thomson Reuters are designed to provide robust support in this new era. These platforms offer a suite of capabilities crucial for managing Pillar Two’s demands: 

• Automated data collection and validation: Both Orbitax GMT and ONESOURCE Tax Provision integrate seamlessly with diverse financial and tax systems. This automation pulls data from general ledgers and financial statements, drastically reducing manual entry, minimising errors, and ensuring data consistency. Crucially, built-in validation tools meticulously check data for completeness, accuracy, and consistency, flagging discrepancies for immediate review. This capability directly addresses the challenge of managing Pillar Two’s extensive data requirements. 

• Accurate and consistent calculations: A core strength of these solutions is their embedded regulatory knowledge.  Orbitax GMT incorporates the latest OECD model rules and local legislation for Pillar Two, while ONESOURCE Tax Provision contains up-to-date general tax laws and regulations. This ensures that all calculations; from determining the effective tax rate (ETR) and applying top-up tax rules under Pillar Two (Orbitax) to calculating deferred tax, current tax, and overall tax provisions (Tax Provision) are performed with precision, consistency, and adherence to the latest standards. 

• Streamlined reporting and compliance management: The platforms significantly simplify the reporting process. Orbitax GMT facilitates the preparation and submission of Pillar Two-specific filings, such as the Global Information Return (GIR) and local top-up tax returns, often using pre-populated templates. Similarly, ONESOURCE Tax Provision aids in preparing broader tax returns and financial statement disclosures. Both solutions feature workflow management tools to track tasks, deadlines, and approvals, ensuring timely completion of all compliance steps. 

• Enhanced analytics and scenario planning: Understanding the financial impact of Pillar Two is vital. Both Orbitax GMT and ONESOURCE Tax Provision offer advanced analytics and scenario planning. Tax professionals can conduct impact analyses to see how Pillar Two affects the group’s overall tax position (Orbitax) or how various tax changes influence the company’s financial standing (Tax Provision). The ability to run “what-if” scenarios helps in assessing different tax strategies and regulatory shifts, supporting informed strategic decision-making. 

• Continuous updates and expert support: Given the dynamic nature of tax regulations, ONESOURCE and Orbitax platforms include update services that automatically incorporate the latest regulatory changes and tax laws. This eases the burden on tax teams to manually track and implement these updates. Furthermore, Thomson Reuters provides comprehensive customer support, including training, documentation, and technical support. 

Strategic steps for effective Pillar Two data management 

Effectively managing Pillar Two requires a proactive and strategic approach: 

1. Assess scope and applicability: Determine if your group meets the revenue threshold for Pillar Two, guiding resource allocation and technology investment. 
2. Understand jurisdictional nuances: Implementation timing and specific rules vary by country. Continuous tracking of local legislation is essential. 
3. Develop a robust compliance framework: Establish clear processes for data collection, calculation, review, and reporting. 
4. Invest in technology early: Early adoption of appropriate technology can smooth the transition, reduce compliance risks, and improve accuracy. 
5. Train and upskill staff: Ensure tax professionals are well-versed in Pillar Two rules and the technology tools used to manage them. 
6. Monitor regulatory developments: Stay informed about ongoing changes to adapt compliance processes swiftly. 

Mastering Pillar Two

Pillar Two undeniably introduces significant complexities for corporate tax professionals. However, these challenges are manageable with the right technological support.  Orbitax GMT and ONESOURCE Tax Provision offer powerful, integrated solutions that automate critical processes, ensure calculation accuracy, and streamline reporting. By strategically investing in such technology and adopting proactive management practices, tax teams can navigate the intricacies of Pillar Two data management, maintain compliance, mitigate risks, and enhance their overall operational efficiency in this new global tax environment. 

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