Process is still king: why Pillar Two compliance starts with solid foundations

As multinationals ramp up for Pillar Two compliance, the allure of automation and analytics is growing. But while technology can streamline, only well-documented, audit-ready processes can withstand regulator and auditor scrutiny. Without a clear compliance framework, even the best tax tech can fail.

Compliance risk is now operational

Many UK headquartered multinationals are realising that Pillar Two is not just a tax calculation issue. It’s a process issue. From qualifying for transitional safe harbours to preparing the GloBE Information Return, each step requires consistent, explainable procedures.

Ross Robertson, Partner at BDO LLP, explained in a recent Tolley webinar:

“Technology can’t think. It just takes data, processes it and produces output. The process by which it is fed the data is what really matters, and that process is going to be scrutinised.”

This shift from purely technical interpretation to operational execution marks a new frontier for in-house tax teams.

Why tech alone isn’t enough

Pillar Two compliance tools can:

• Extract and transform data
• Automate safe harbour testing
• Standardise GloBE calculations

But they cannot:

• Interpret gaps in local reporting frameworks
• Document qualitative rationale for deferred tax decisions
• Justify manual overrides or data exclusions

Without a fully documented audit trail, any automated result can be challenged and potentially disqualified.

“Most groups are placing significant reliance on the transitional safe harbour. But without a fit-for-purpose country by country report process, that reliance may not hold.” – Ross Robertson, BDO LLP

Five traits of a defensible Pillar Two process

1. Documented

   
   Map each step from data extraction to filing, showing roles, controls and assumptions.

2. Repeatable

   
   Design processes that work across multiple reporting periods and jurisdictions.

3. Auditable

   
   Maintain a clear rationale for manual interventions, exclusions and estimates.

4. Aligned

   
   Integrate with consolidation, statutory reporting and CbCR governance structures.

5. Adaptive

   
   Enable quick updates when OECD or local implementation rules evolve.

As noted in KPMG’s global readiness report, large multinationals will need to redesign their tax workflows to support data transparency, auditability and real-time compliance.

Where to focus your process design efforts

• CbCR preparation

  
  Refine the methodology and data source mapping so it qualifies for safe harbour use.

• Transitional reliefs

  
  Ensure eligibility is documented in case of auditor or authority challenge.

• Globe data trail

  
  Establish cross-entity reconciliations, sign-offs and commentary fields within your workflow.

• Issue spotting

  
  Equip internal teams to flag technical questions early, don’t leave them to the software.

Build process first, layer in tech second

Technology should enhance your process, not replace it. Start with a robust manual framework, then integrate tools to automate stable steps, not subjective ones.

As Jordan Gill (Alvarez & Marsal) warned:

“Most jurisdictions still lack local tax infrastructure and expertise. If your process isn't solid from the centre, you’ll struggle to scale compliance across your global footprint.”

Explore how Tolley+ can support your Pillar Two process transformation.

Watch the full webinar here