Key takeaways:

• • • Understanding the announcement 鈥� The G7 鈥渆xemption鈥� is an informal understanding, not a legal change.

    • Rules still in effect 鈥� Pillar 2 rules remain in effect across most jurisdictions, and US multinationals must still comply. Compliance and reporting obligations will continue and may increase.

    • Corporate tax departments need to keep informed 鈥� Tax departments should stay the course and be prepared to adapt as guidance evolves.

The global tax landscape is in flux, especially for US multinationals navigating Pillar 2鈥檚 global minimum tax rules. The G7鈥檚 recent announcement of a potential exemption for US-parented groups from certain aspects of Pillar 2 has raised questions and cautious optimism. To provide clarity on this issue, Jacob Fulton, Head听of the Quantitative Tax Practice for , shares his insights with Nadya Britton of the 成人VR视频 Institute (TRI).

Nadya Britton (TRI): The G7鈥檚 June announcement about a Pillar 2 exemption for United States-based multinationals created a stir. Can you explain what this actually means?

Jacob Fulton (Orbitax): The announcement suggested that G7 countries 鈥� led by the US, Canada, and the United Kingdom 鈥� had reached an understanding to exclude US-parented groups from the Income Inclusion Rule and Undertaxed Profits Rule under Pillar 2. On its face, it sounded like significant relief for US multinationals.

However, there鈥檚 little detail on how this would work in practice. The statement is more of a political commitment than a change in law. The Qualified Domestic Minimum Top-up Tax (QDMTT) remains in place, and the legislative removal of Section 899 from the One Big Beautiful Bill in the US doesn鈥檛 change the current Pillar 2 obligations for multinationals. So, while the announcement sounds promising, it introduces more questions and uncertainty rather than offering clear, immediate relief.

Britton: Given the uncertainty, should the in-house tax departments of US multinational change their approach to Pillar 2 compliance?

Fulton: No, they should not 鈥� the G7鈥檚 understanding doesn鈥檛 override existing laws. More than 50 jurisdictions have enacted Pillar 2 legislation, and those rules remain in force. For tax years 2024 and 2025, US multinationals are still subject to the same compliance and reporting obligations as before.

It鈥檚 important for corporate tax departments to stay the course. While there may be future guidance, we don鈥檛 know the timeline or the specifics. Delaying or pausing Pillar 2 implementation based on this announcement would be risky and could leave companies noncompliant if nothing changes.

Britton: What about tax planning? Is there an opportunity for companies to adjust their strategies in light of the G7 announcement?

Fulton: Not really. The current uncertainty makes tax planning more complex, not less. While it鈥檚 tempting to consider planning opportunities, there鈥檚 no concrete framework for how the exemption would be applied, or even if the exemption will be applied.

The Pillar 2 regime already contains robust transition rules designed to prevent companies from exploiting gaps or planning opportunities during the rollout. Any new guidance could target retroactive planning aimed at leveraging this potential exemption. Until there鈥檚 greater clarity, companies should be cautious and avoid making significant planning changes based on speculation.

Britton: Beyond the exemption, what broader challenges does Pillar 2 present, especially now?

Fulton: Pillar 2 was initially envisioned as a uniform global minimum tax, but in practice, it鈥檚 fragmented. Each jurisdiction has implemented the rules on different timelines and with varying interpretations. The G7鈥檚 move may add further complexity, as only a few countries are part of this understanding. In fact, most jurisdictions have not agreed听to adjust their laws to this point, so US multinationals could face inconsistent rules and additional compliance requirements.

If only some countries adopt the exemption for US groups while others do not, companies may need to navigate a patchwork of rules, increasing the risk of errors and duplicative reporting. This environment heightens the need for robust technology solutions to manage calculations, track legislative changes, and handle complex reporting obligations.

Britton: Does this mean the compliance burden for US multinationals is likely to increase?

Fulton: Yes, absolutely. The G7 announcement, rather than simplifying things, adds another layer of complexity. Even if some countries provide relief, others may not, so corporate tax departments need to be prepared for additional filings and ongoing compliance rules in multiple jurisdictions.

For example, even where the Global Anti-Base Erosion (GloBE) Information Return might not be required due to an exemption, local jurisdictions may impose increased QDMTT reporting or other compliance burdens. Each country鈥檚 requirements are unique, and in many cases, they apply regardless of whether a tax liability exists. The compliance workload will not decrease in the near term.

Britton: Given all this, what should in-house tax departments be doing right now?

Fulton: Tax departments should continue with their current Pillar 2 compliance and implementation plans. It鈥檚 critical to keep up with local legislation, maintain documentation, and be prepared for reporting in every jurisdiction in which it鈥檚 required.

Investing in technology is more important than ever. Automated solutions can help track legislative changes, manage calculations, and streamline reporting. As the rules evolve and complexity increases, manual approaches will struggle to keep pace.

Finally, corporate tax teams should stay engaged with industry groups and advisors, monitor new guidance closely, and be ready to adapt as the situation develops.

Britton: Any final thoughts for US multinationals navigating this evolving landscape?

Fulton: The G7鈥檚 announcement is a headline, not a new law 鈥� and it doesn鈥檛 change the immediate reality for US multinationals. The best course is to continue preparations, invest in robust technology, and remain vigilant for further developments.

As Pillar 2 evolves, flexibility and readiness to adapt will be critical. While the promise of an exemption is attractive, the reality is increased complexity and ongoing compliance obligations for the foreseeable future.

You can find more of our coverage of听the impact of the One Big Beautiful Bill Act听here

Regardless, business must go on 鈥� and for the makers of products and the providers of services that require goods to move across borders, sleepless nights maybe more a reality than it should.

Indeed, the impact of tariff wars on supply chains is profound. Increased tariffs raise the cost of imported goods, forcing businesses to decide whether they can or would absorb the costs or pass them on to consumers 鈥� and either option can lead to a reduction in profit margins. The 成人VR视频 Institute鈥檚 underscores the complexities and concerns around corporate supply chains. The report noted that supply chain disruptions remained a constant concern among trading professionals surveyed, and the complexities of managing these problems were significant. And for the majority of the survey respondents, it was their number one strategic priority.

Strategies for readying your supply chain

The coming months and years may continue to be a wild ride, and strategies such as burying one鈥檚 head in metaphoric sand isn鈥檛 an option (or at least not a good one) or hoping things will soon settle down (it very well might, but business cannot afford to stop and have a wait-and-see moment).

To navigate the challenges of global trade today and the future, proactive strategies that enhance supply chain resilience and flexibility is necessary. And while most business strategies include considerations of such external factors such as geopolitical tensions and trade wars, these concerns necessitate strategies that must be somewhat malleable. As businesses now attempt to successfully navigate the current uncertainty, there are several main considerations for managing supply chains, including:

Diversification of suppliers 鈥� One of the most effective ways to mitigate the risks of tariff wars is to diversify your supplier base. By sourcing from multiple countries, businesses can reduce their vulnerability to trade disruptions in any single region. For example, consider suppliers that are in countries with lower tariffs or aren鈥檛 subject to tariffs at all.

Go local 鈥� On-shore whenever possible. For many businesses, the cost of using locally sourced materials has made it less feasible to use those materials; however, it is worth comparing local sourcing to the rising cost of continuing to get materials abroad amid tariffs disputes.

Agility & flexibility 鈥� Having supply chain suppliers that can be flexibility is critical. Suppliers that are amendable to renegotiating contracts, possible absorbing some of the costs resulting from tariffs, and more should be favored. Whenever possible, consider pre-ordering or stocking up on materials and products in advance of possible tariffs increases. Further, if possible, consider if your products could to utilize different materials.

Collaboration & partnerships 鈥� Unusual times call for unusual alliances. Having strong relationship with suppliers, logistics providers, and even competitors can increase supply chain resilience. Collaborative efforts can lead to shared resources, combined knowledge, and further innovations that may improve overall supply chain performance.

Investment in technology 鈥� Leveraging technology is critical for supply chain management. Using technologies that can provide advanced analytics can assist with predicting and providing models for navigating tariffs and working with suppliers. The rapid speed of changes in tariff policies and regulations requires utilizing technology that can assist with risk management strategy, which often involves identifying potential risks, assessing their impact, and implementing contingency plans. Scenario-planning and stress-testing can help businesses prepare for various trade war scenarios and ensure continuity of operations. Businesses also need technologies that provide real-time government alerts to stay current on trade-classification changes and regulatory trends as well.

Conclusion

In this foreseeable future, it is clear that the global trade environment will continue to present challenges. Tariff wars and protectionist policies are likely to persist, making it essential for businesses to adopt resilient and adaptable supply chain strategies. In a time of tariff wars and increasing complexity, readiness is important. Businesses that invest in supply chain resilience and adaptability will be better equipped to overcome the challenges ahead.

You can find more about how companies can best manage their supply chains here

is a two-pillar solution to address tax challenges arising from the digitalization of the economy. Pillar One focuses on the allocation of taxing rights among jurisdictions, while Pillar Two aims to ensure that multinational enterprises (MNEs) pay a minimum level of tax on profits, regardless of where they operate.

consists of four interrelated rules: i) the Income Inclusion Rule (IIR); ii) the Undertaxed Payments Rule (UTPR); iii) the Subject to Tax Rule (STTR); and iv) the Global Anti-Base Erosion (GloBE) rules.

The central component of Pillar Two is the GloBE rules which provide a framework for the application of the IIR and the UTPR. Its function is to impose top-up tax on any MNE that is subject to an effective tax rate that is below a certain threshold, which is yet to be agreed upon by the members of the Inclusive Framework. The GloBE rules apply to MNEs that had annual consolidated revenue of more than 鈧�750 million in the previous fiscal year.

Detailing the regulations

The rolling out of Pillar One and Two, as expansive and complicated as they are, often left taxpayers scrambling to meet compliance deadlines without having the complete guidance from tax authorities. In order to provide more clarity and guidance on the GloBE rules, the OECD has issued several documents covering various aspects of the design and operation of the rules, such as the scope, calculation, administration, and enforcement of the top-up tax. The most recent documents, , include:

Transitional CbCR safe harbor guidance 鈥� This guidance outlined how MNE groups can use the Country-by-Country Reporting (CbCR) data as a safe harbor to determine their effective tax rates under the GloBE rules, at least until a common reporting template is developed. The guidance also clarifies how tax authorities can use the CbCR data to assess the compliance risk of MNEs and initiate audits or enquiries.

Qualified status Q&A document 鈥� This explains the peer review process that will be used to determine whether a jurisdiction has implemented the GloBE rules in a manner consistent with the OECD standards and guidance, and therefore qualifies for the status of a GloBE rule-implementing jurisdiction. The qualified status allows a jurisdiction to exempt its resident entities from the application of the UTPR by other jurisdictions, and to apply the IIR to the income of its resident entities that are part of an MNE group.

Administrative guidance 鈥� This included guidance in the following areas:

• • • Deferred tax liability recapture 鈥� This document provides extensive guidelines on how to determine if deferred tax liability accruals have reversed within five years, and how to account for such reversals in the calculation of the effective tax rate and the top-up tax under the GloBE rules.
    • Differences between GloBE and accounting values 鈥� This guidance addresses the situations in which there are differences between the values used for GloBE purposes and the values used for accounting purposes, such as different functional currencies, different consolidation methods, or different accounting standards. The guidance explains how to reconcile and adjust these differences to ensure consistency and accuracy in the application of the GloBE rules.
    • Allocation of cross-border current and deferred taxes 鈥� This guidance explains how to allocate the current and deferred taxes paid or accrued by an entity to its income from different sources and jurisdictions, taking into account the relevant tax rules and treaties. The guidance also provides examples and formulas to illustrate the allocation process.

The OECD will continue to provide additional guidance in the 鈥渘ear future鈥� on topics such as the treatment of losses, the definition of covered taxes, the coordination of the STTR with the UTPR, and the dispute resolution mechanisms. The OECD also intends to develop a common reporting template and a multilateral instrument to facilitate the implementation and administration of the GloBE rules.

Importantly, the implementation of the GloBE rules has had significant implications for the tax planning and compliance functions for corporate tax departments of many multi-national companies. These departments no doubt have increased their workload as they now have to monitor and report their effective tax rates across multiple jurisdictions and entities, while potentially adjusting their tax positions and structures to avoid or minimize the top-up tax.

It鈥檚 worth mentioning GloBE and Pillar Two rules are not a replacement of existing tax laws in various jurisdictions, but instead, they are an addition to them, creating complex situations and possible disputes among tax authorities. Corporate tax departments will have to be extremely efficient, potentially relying more on automation and technology to organize data, keep up with changing regulations in multiple jurisdictions, while still engaging in strategic work like tax planning and modeling.

You can find more about the issues facing Corporate Tax Departments here.

Modern CAMT: What is it and who is impacted?

imposes a 15% minimum tax on the adjusted financial statement income (AFSI) of large corporations whose three-year average annual AFSI exceeds $1 billion (applicable corporations). The CAMT applies for tax years beginning after December 31, 2022.

This is a significant change from the prior CAMT in that it is based on AFSI, rather than on taxable income, that meets the income threshold over a three year-period. Financial statement income is the income reported to shareholders and is typically higher than the taxable income reported to the U.S. Internal Revenue Service (IRS), mainly because it doesn’t include the same breadth of tax deductions and credits.

The U.S. Congress鈥� stated it believes that only about 150 companies are impacted by the new CAMT, but other estimates sa the number could be at least twice as many.

Four considerations related to CAMT

1. Understanding CAMT rules

It’s crucial for corporate tax departments to have a deep understanding of the new CAMT rules and how it may impact their tax decisions under the Inflation Reduction Act. Since the inception of the new CAMT, more clarity is needed, and throughout 2023 the IRS continuously released clarification on various parts of the regulations. , the IRS provided the most comprehensive information around CAMT to date, including how to determine a company’s financial statement income and AFSI and, more importantly when and in what situations 鈥渃orporations are subject to CAMT, CAMT foreign tax credits, tax consolidated groups, foreign corporations, depreciable property, wireless spectrum, duplications and omissions of certain items, and financial statement net operating losses.鈥�

2. Impact on tax liability

For businesses that fall within the $1 billion threshold, a look at how their tax liabilities are calculated is required. Corporate tax leaders must analyze the regular taxable income and their own financial statements. When a company calculates its tax liability, it must determine its CAMT liability by applying a flat tax rate to an adjusted amount of income, which includes adding back certain tax preference items and making other adjustments. If the CAMT is higher than the regular tax liability, the company must pay the CAMT amount. This can impact companies by limiting the benefits of certain deductions and credits, potentially resulting in a higher tax bill. The specifics of how the CAMT affects a company can vary based on the company’s financial situation, its use of deductions and credits, and any further changes in tax legislation.

3. Financial reporting implications

The implications of the CAMT on financial reporting are multifaceted, including how it can lead to increased tax expenses for a company and impact its net income. Companies must account for this potential tax liability on their financial statements, which could result in a higher effective tax rate reported in their income statement.

4. Strategic planning

CAMT can complicate tax planning and financial forecasting for corporate tax departments, which will now have to consider the CAMT in tax planning. The new rules can introduce additional uncertainty into future tax expense estimations, potentially affecting a company’s investment decisions and earnings projections. Developing a sound strategic tax plan can help a company minimize exposure to CAMT while still maintaining compliance with tax laws. For example, corporate tax departments may have to think about how they adjust the timing of certain deductions or credits to optimize tax outcomes. Under CAMT, certain tax credits are allowed and, if they are not already being taken used, corporate tax leaders should look to (if applicable).

Although the IRS did off some throughout last year, some additional uncertainties and complexities also arose from those very clarifications. There remain many questions from corporate tax departments as they try and remain compliant while waiting for further updates from tax authorities.

With the information provides so far, however, there is still a lot of complex issues and strategic decisions that corporate tax departments will have to navigate. Therefore, staying abreast of the latest developments from the IRS is critically important at this stage.

These initiatives have and will set the stage for significant reform in the region and around the world. Although they originated from different governing bodies and address distinct aspects of taxation, they share a common goal: To ensure that corporations pay a fair share of taxes in a rapidly globalizing economy.

BEFIT and Pillar 2 鈥� What are they?

On September 12, 2023, the European Commission adopted BEFIT with the goal to simplify the European Union’s tax framework by creating a unified set of rules for corporate taxation. It sought to replace what could be viewed as a patchwork of individual countries’ national tax systems. Before the enactment of BEFIT, up to 27 EU member countries , which in some cases made it difficult and costly for organizations to navigate. BEFIT’s primary goals are to reduce business administrative burdens, eliminate tax obstacles for cross-border investment within the EU, and combat tax avoidance.

On December 21, 2021,听the OECD/G20 released Model Global Anti-Base Erosion (GloBE) . It introduces a global minimum tax rate of 15% for multinational enterprises, aiming to prevent tax base erosion and profit-shifting to low or no-tax jurisdictions. Two significant components of Pillar 2 are the Income Inclusion Rule and the Undertaxed Payments Rule, which together ensure that multinational enterprises pay a minimum level of tax on their income regardless of where it is earned.

Similarities and differences

The enactment of BEFIT and Pillar 2 has created confusion for corporate tax departments as to whether these two tax regimes cover the same or similar tax provisions. Both BEFIT and Pillar 2 would say their goal is to combat tax avoidance by tackling aggressive tax planning and having corporations pay their fair share. In addition, both regulations’ core principle is for corporate taxation to align with the jurisdiction in which the economic activities take place, moving away from the traditional method that emphasized the businesses’ physical presence only instead of where its customers are. Lastly, the primary target for both BEFIT and Pillar 2 are multinational companies.

Yet, it is worthwhile to note how BEFIT and Pillar 2 differ as well. BEFIT’s scope and jurisdiction are specific to the EU鈥檚 member countries, and its goal is to create a simplified and more harmonious tax system among member countries. Pillar 2’s scope is global, and more than听听have agreed to enact it. Another difference between the two policies is that BEFIT seeks to听听with profit allocation based on a specific formula, effectively redistributing taxing rights among EU countries based on fundamental economic factors. Pillar 2 instead seeks to create a floor for tax rates that multinational companies should pay globally.

Also, it is worth noting that implementing BEFIT would necessitate significant changes in national tax laws within the EU, requiring a unified approach to profit calculation and reporting.听Pillar 2’s implementation, while also requiring changes in national laws, primarily involves ensuring that multinational enterprises pay at least the minimum tax rate, potentially leading to different administrative and compliance requirements.

Implications for multinational corporations

Multinational corporations operating within the EU and globally must navigate the implications of both BEFIT and Pillar 2. They will face more complex compliance obligations with both regulations and must adjust their tax planning and strategies in the regions in which they operate, not just in which they are physically located.

Corporate tax departments’ role in business decisions will become even more critical as they provide information on the potential impacts on center investment and growth decisions for the company, including whether to expand or contract the regions in which the company does business based on the tax implications.

Further, both BEFIT and Pillar 2 have sweeping implications for the countries and regions that participate in them and for the local stakeholders, including businesses, tax professionals, and policymakers.

Right now, these regulations are static, but they will continue to evolve. It is important for all stakeholders 鈥� especially corporate tax departments and the outside tax professionals that may advise them 鈥� to be aware and involved in the ongoing conversations on how to address possible challenges related to these regulations while achieving simplicity, fairness, and effective taxation.

Countries around the world 鈥� such as Australia, Japan, the United Kingdom, and member countries of the European Union 鈥� are implementing Pillar 2, which means that multinational corporations operating in those countries must soon adhere to new tax rules and reporting obligations.

For multinational corporations鈥� tax departments, Pillar 2 ushers in a host of new challenges, including more complex tax calculations, additional reporting and compliance obligations, a higher risk of tax controversies, and an array of additional costs and other considerations. And yet, according to , many companies are still wrestling with major decisions about how to comply with Pillar 2 requirements mere months before the new tax rules are enacted.

Preparing for Pillar 2

鈥淧illar 2 is going to require significant additional controls and data,鈥� says Alistair Pepper, a managing director in KPMG鈥檚 Washington National Tax practice. 鈥淢ost companies are still working through exactly what this means and what they need to do in order to fulfill Pillar 2 reporting obligations.鈥�

KPMG鈥檚 research involved interviews with chief tax officers (CTOs) and senior tax leaders from approximately 100 multinational corporations that generate $1 billion or more in revenue, 75% of which operate in more than 25 jurisdictions. Overall, 82% of respondents that KPMG interviewed said they were actively preparing for Pillar 2, primarily by addressing questions about additional staffing and technology, as well as data flows, inter-departmental communications, budgeting, and available safe harbors.

Data is perhaps the most complex component of Pillar 2 compliance. Not only must companies have access to consistent data in order to calculate their tax burden under the new rules, but they must also adapt their internal processes, controls, and systems to gather and report data even as the OECD continues to issue clarificatory guidance about how the rules should be applied.

鈥淭he new Pillar 2 rules are quite extensive and involve hundreds of data points that companies don鈥檛 necessarily have access to,鈥� says KPMG鈥檚 Pepper. 鈥淎s a result, we鈥檙e seeing lots of groups look at transitional (country-by-country) safe harbors that allow them to defer the full calculation for up to three years, giving them time to fill data gaps and get the additional data they need.鈥�

Pillar 2 contains three transitional safe harbors 鈥� a simplified effective tax rate, a routine profits test, and a de minimis test 鈥� all of which relieve those multinational corporations operating in low-risk countries from having to report full Pillar 2 calculations until Dec. 31, 2026. According to Pepper, a majority of KPMG clients will likely qualify for safe harbors in some jurisdictions.

Indeed, while 85% of the respondents to the KPMG survey said they had initiated discussions with upper management about the additional administrative and compliance costs associated with Pillar 2 preparation, only 11% had asked for and received the extra budget needed to cover those costs. The three-year extension that safe harbors provide may be one reason Pillar 2 compliance costs have yet to be budgeted.

Additional costs: technology and staff

Though Pepper says it is difficult to estimate what the total cost of Pillar 2 compliance will be for any given company, the bulk of the additional spending is likely to be directed toward in-house technological upgrades, additional staff, and possible third-party assistance.

On the technological side, Pepper explains, many companies will need to invest in upgrades to their enterprise resource planning (ERP) systems to get the data they need. On top of this, 鈥減eople will need some kind of Pillar 2 calculation engine that takes your income and taxes and tells you whether you are above or below the 15% tax threshold.鈥� Those with jurisdictions below the 15% threshold will have to pay a top-up tax to reach 15%.

Additional staff will also likely be needed to collect and manage the data required for Pillar 2, Pepper says. According to the KPMG research, 57% of respondents from multinational corporations surveyed said they expect to hire additional full-time staff at the junior level to handle tasks related to Pillar 2, and 46% plan to hire extra managerial staff. And 18% said they expect additional hires at the director level, and 4% are looking for a new VP. Just 11% said they are unsure if they will need extra staff at all.

For multinational corporations鈥� tax departments, Pillar 2 ushers in a host of new challenges, including more complex tax calculations, additional reporting and compliance obligations, a higher risk of tax controversies, and an array of additional costs and other considerations.

Multinational corporations are also engaged in a healthy debate about whether to manage Pillar 2 requirements in-house or co-source reporting obligations with a third-party provider. According to the KPMG research, 54% of respondents interviewed said their companies are considering co-sourcing their tax function to leverage a third-party firm鈥檚 tax expertise and stronger technological capabilities. However, 36% said they prefer to manage Pillar 2 requirements in-house to avoid dependence on a third-party provider and its tools. Other costs associated with Pillar 2 compliance include a surge in external audit costs (expected by 69% of those surveyed) and a rise in tax liabilities.

For Pepper, however, the most interesting statistic uncovered by the KPMG research is that 27% of respondents said they expect Pillar 2 to have no effect whatsoever on their companies鈥� tax liability, and an additional 57% said they expect their companies鈥� liability to increase by less than $50 million.

Pepper says that 鈥渟ome people are asking the question: Is Pillar 2 really worth it?鈥� After all, he adds, many companies are going to be put in the position of having to invest in the technology, people, and systems necessary to meet the requirements for Pillar Two, only to report that they do not owe significant additional taxes.

鈥淭he biggest companies are fairly well prepared for Pillar 2,鈥� Pepper says. 鈥淚t鈥檚 the small- and medium-sized businesses that are still getting up to speed on what these rules mean and what they need to do from a systems standpoint. It鈥檚 difficult, though, because these rules are a moving target and will remain so for an extended period 鈥� possibly up to five years.鈥�

Still preparing?

In the meantime, Pepper advises those companies still preparing for Pillar 2 to:

• • • determine if and how the company can benefit from safe harbors;
    • estimate the impact of Pillar 2 on the company鈥檚 financial reporting; and
    • decide which compliance strategy and model the company should adopt.

Finally, communication with executive management is paramount, says Pepper, because while 73% of the tax professionals KPMG interviewed said they had already discussed the potential compliance and Pillar 2’s administrative costs, 27% said they had not, or had only discussed it in high-level terms.

鈥淧illar 2 involves more than the tax department,鈥� Pepper explains, adding that the additional costs associated with Pillar 2 preparation are going to require support and approval from the top. If the tax department has yet to engage executive-level management about Pillar 2 compliance, it should do so now, he advises, because Pillar 2 compliance can鈥檛 be put on the backburner for much longer without any consequences.