Pillar Two Disclosures under Company Law: Analyzing Modern Accounting Standards and Disclosures Concerning Deferred Tax Liabilities and International Tax Regularization

As the world of business has become more global, governments are facing pressure to coordinate their tax policies to tackle tax avoidance by multinational corporations (MNEs). The most important contribution to international taxation has been the efforts of the Organisation for Economic Co-operation and Development (OECD) to put in place a Global Anti-Base Erosion (GloBE) regime that would require a minimum effective tax rate of 15% in each jurisdiction in which a large multinational group does business. Pillar Two is mainly a tax policy issue, but it also has significant company law, financial reporting and corporate governance implications. Businesses will need to review their accounting processes, including deferred tax assets and liabilities, tax disclosures and transparency of the financial statements, in the wake of the implementation of Pillar Two. The accounting principles have thus been adapted to reflect these changes, and companies are now obligated to present shareholders with more transparent information about their Pillar Two exposure. While governments everywhere are rushing to enact laws that apply to compliance, corporate compliance has come a long way from tax planning and is now more than ever required to follow company law and accounting regulation.