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How many global companies are leveraging unified capabilities to support tax compliance in a fluid regulatory landscape
In today’s global economy, legacy tax compliance tools and practices typically can’t keep up with the evolving regulatory landscape. Emerging global standards, such as Pillar Two, are prompting companies to explore new strategies to harness the data necessary for meeting ongoing compliance requirements.
Advancements in data and technology have empowered regulatory authorities to increase tax control measures, prevent tax evasion, and enhance tax collection efforts. Typically, these developments make it imperative for businesses to integrate data and technology advancements into their end-to-end processes and strategies.
Bracing for the reporting and compliance impact of Pillar Two
These considerations take on new importance with Pillar Two. Legislation has already been implemented in over 35 jurisdictions effective beginning in 2024, with over 50 jurisdictions expected to have been implemented in 2025. Pillar Two, which the Organization for Economic Co-operation and Development (OECD) announced in 2021, introduces a 15% global minimum tax on multinational groups with consolidated revenue over €750 million operating in any country that has adopted Pillar Two legislation. Many of the complexities include reporting and compliance requirements bespoke to each countries’ enacted legislation. Our Pillar Two country tracker helps provide the status of Pillar Two implementation in different countries and regions.
Pillar Two introduces new data requirements, effectively requiring companies to maintain a new set of books. This often compels companies to reassess their data strategy so they can determine how to source and maintain the necessary data for Pillar Two compliance and the analytics needed to review and understand that data. Many companies are implementing tailored approaches to help tackle these challenges.
Tax executives from two global companies recently shared their insights into their experience on the challenges of tax compliance, the strategies they have adopted, and the successes they have achieved by effectively leveraging data and technology.
Transitioning tax from a vertical to a horizontal function
One of the tax executives we spoke to recognized that these changes were pushing organizations like theirs to revisit well-entrenched business processes, as well as methods for handling tax compliance. The new regulations, in essence, are making many legacy systems and processes obsolete.
Many businesses have a misperception of tax as a vertical within the reporting and finance function. In reality, tax often operates as a horizontal that consumes data and integrates with processes and deliverables across the organization. To help address this, the tax team defined and documented their detailed data requirements. Then, they worked collaboratively with data owners to update source systems, focusing on data needs resulting from global regulatory changes such as Pillar Two, transfer pricing, and other new tax laws.
Another tax leader (from a footwear and apparel retailer) cited that they are leveraging Pillar Two as an opportunity to elevate the tax function and enhance effectiveness. Understanding that the corporate tax team is the number one user of data that is stored and maintained in various locations and by a variety of corporate teams, a streamlined process for communicating, gathering and storing the data is needed to comply with regulations.
Both global companies are working to centralize their tax data by implementing PwC tax capabilities enhanced for Oracle’s stack of technologies. Leveraging Oracle solutions, PwC can help deliver enhanced Pillar Two data processing capabilities by centralizing data collection and storage, making it accessible for various corporate needs, including tax reporting, tax compliance, transfer pricing and now Pillar Two.
Bringing it together with holistic, streamlined capabilities
The collaboration between PwC and Oracle helps make it possible for tax organizations to comply with the new regulations with confidence, while accelerating Pillar Two data processing. Based on our experience, there are more than 330 data points that should be gathered for Pillar Two calculations, of which an estimated 40%-60% can be sourced from Oracle Cloud (the remaining data is expected to be sourced from a variety of sub-ledger systems, tax provisions systems, employee benefits systems and offline schedules and files). And because Oracle has its own ecosystem, data can be shared across Oracle solutions seamlessly without the need to configure additional integrations, particularly for those using Tax Reporting Cloud (TRC) as their provision system. Among other things, this can give many companies a single point of access to multi-stream process management that can be scheduled, audited, tracked and analyzed on the Oracle platform without additional software licenses. Oracle solutions also can provide the flexibility to connect to external systems, such as tax compliance software, which helps support their corporate compliance efforts.
Collaborating to help you meet the tax future with confidence
A dynamic, forward-looking data strategy is more important than ever for your tax department. Access your enterprise's data and put it to work in a way that matters for your stakeholders. PwC and Oracle’s combined industry-leading knowledge helps deliver the technology and business intelligence you should have as you are navigating the world’s increasingly dynamic and ever-changing regulatory landscape.
Explore how PwC can support your organization in navigating tax challenges through our flexible modular approach to Pillar Two reporting and compliance. We can help enhance the use of your existing data across a variety of platforms regardless of your current technology infrastructure, tailoring our approach to align with your preferred operating model for Pillar Two. Wherever you are on your journey, we can work with you to help you meet your obligations effectively and with confidence.
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