Transfer Pricing Services – BEPS 2.0 Pillar Two Implementation
The introduction of BEPS 2.0 Pillar Two marks a fundamental shift in the international tax landscape. With the global minimum tax now becoming a reality, multinational enterprise (MNE) groups face unprecedented compliance challenges and potential increases in their global tax burden. Failure to properly assess and implement Pillar Two requirements can result in unexpected top-up taxes, increased reporting complexity, and heightened scrutiny from tax authorities.
BEPS 2.0 Pillar Two, implemented through the OECD Global Anti-Base Erosion (GloBE) Model Rules, aims to ensure that large MNE groups pay a minimum level of tax—currently set at 15%—in every jurisdiction in which they operate. In Indonesia, these rules are adopted through PMK-136/2024, requiring in-scope groups to carefully evaluate their tax positions and prepare for new compliance and reporting obligations.
A critical component of Pillar Two implementation is the calculation of the jurisdictional Effective Tax Rate (ETR). This involves determining GloBE income by adjusting financial accounting profit for specific items prescribed under the GloBE rules, including exclusions, timing differences, and deferred tax adjustments. Accurate ETR computations are essential to identify whether a jurisdiction falls below the minimum tax threshold and triggers a top-up tax.
Once low-taxed jurisdictions are identified, the next step is the quantification of potential Top-up Tax exposure. This requires applying complex allocation mechanisms under the Income Inclusion Rule (IIR) and, where applicable, the Undertaxed Payments Rule (UTPR). A thorough understanding of group structures, ownership chains, and intercompany arrangements is crucial to ensure that top-up taxes are calculated and allocated correctly.
Another key aspect of Pillar Two implementation is assessing eligibility for available safe harbours. Transitional safe harbour rules, such as those based on Country-by-Country Reporting data, may significantly reduce compliance burdens and limit top-up tax exposure in certain jurisdictions. Evaluating eligibility and ensuring proper documentation can provide meaningful relief during the initial years of implementation.
In addition to technical calculations, Pillar Two introduces extensive compliance and reporting requirements. MNE groups must prepare detailed GloBE information returns, maintain supporting documentation, and align internal processes, systems, and controls to support ongoing compliance. Early planning and impact assessments are therefore essential to manage both tax and operational risks.
By proactively implementing BEPS 2.0 Pillar Two in line with OECD guidance and PMK-136/2024, MNE groups can gain clarity on their global tax position, minimize uncertainty, and avoid costly surprises.
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Prepare your organization for the global minimum tax regime with confidence. Engage experienced Pillar Two advisors to assess impacts, optimize compliance, and navigate the complexities of BEPS 2.0 under OECD GloBE rules and PMK-136/2024.
