Exclusive: Michael Vassilieff Issues Warning to MNEs Regarding BEPS Pillar Two Compliance
Tax teams across the globe are racing to prepare for BEPS Pillar Two, a significant reform aimed at ensuring large multinationals pay a minimum level of tax. For many organisations, the challenge lies not in awareness but in the speed and depth of their preparations. Michael Vassilieff, Sales Director for CCH Integrator at Wolters Kluwer Tax & Accounting Asia Pacific, based in Sydney, emphasised the critical urgency of action. He noted that the Australian Taxation Office (ATO) recently released guidance indicating that every business within the scope of Pillar Two must lodge a local return by June 2026, which is approaching rapidly. Vassilieff highlighted that penalties for late lodgements would align with those currently imposed on significant global entities, making it essential for businesses to take “reasonable measures” to comply.
Despite increasing awareness, confusion remains prevalent among multinationals. One common misconception is that falling under safe harbours absolves companies of their responsibilities. Vassilieff clarified that while safe harbours may exempt businesses from paying top-up tax, they are still required to lodge their returns, with penalties for non-compliance. Additionally, the ownership of data within multinationals presents challenges, as local subsidiaries often assume that their overseas headquarters are responsible for reporting. However, regulators are increasingly demanding local returns, which adds to the confusion for many subsidiaries. According to CCH Integrator’s annual BEPS Pillar Two Readiness Study, 60% of surveyed multinationals are still unprepared for lodging either a global or local return. Vassilieff stressed that organisations that began their preparations early are managing the transition most effectively. He cited a global consumer products company that established a working group of tax leads in key jurisdictions two years prior to the rules taking effect, focusing initially on data capture and now on filing. Best practices now involve ensuring robust systems are in place, including risk assessments, software solutions for calculations, and processes for lodgement across jurisdictions. Beyond mere compliance, Pillar Two is transforming the corporate tax function, with tax leaders now managing more data than any other department, thereby increasing their visibility with finance chiefs.
Categories: Tax Compliance, Data Management, Corporate Tax Strategy
Tags: BEPS, Pillar Two, Multinationals, Tax Compliance, Local Returns, Safe Harbours, Penalties, Data Ownership, Tax Preparation, Corporate Tax Function