Tax News & Views International Weekly: Is Pillar Two Ready for Takeoff?

The Organization for Economic Cooperation and Development’s Pillar Two global minimum tax has been in the works for what feels like forever.

And yet, according to one key business group, many jurisdictions are still unprepared for its first filing deadline, now only months away.

The Business at OECD group—still often called BIAC, from when its name was Business Industry Advisory Council—recently penned a letter to Manal Corwin, the OECD’s director of tax policy and administration, raising alarm bells about the 15% minimum tax’s first operational year, according to news reports.

The letter in particular highlighted that many tax authorities haven’t finalized details for their global information return, what taxpayers are meant to submit so administrations can determine their Pillar Two liability. In theory, the GIR will act as one template which jurisdictions can exchange between themselves, reducing compliance burdens for companies. But many have raised fears that each country could have slightly different requirements, dramatically raising the compliance costs.

BIAC also noted that many jurisdictions have not signed onto the multilateral convention to exchange the reports, or made other arrangements to exchange them between tax authorities.

Due to the uncertainties, the business organization is calling for either a delay in the initial filing deadline, now set to June 30, or to reduce or lift penalties for noncompliance in the first year, according to news reports.

While the OECD has not yet responded, it did recently release a “toolkit” of guidance for jurisdictions which have implemented or are implementing the new rules. The organization said it is a “roadmap” of steps for successful implementation and includes “best practices” for administrations to consider. The report emphasizes that establishing exchanges for the global information return–so that a multinational corporation only needs to file it once, with one tax authority, each year–is essential for administrative ease.

It’s not surprising that an endeavor as far-reaching and complex as Pillar Two would have hiccups as it gets off the ground. But this could be a crucial time to determine how workable the system will be in the years to come.

Noteworthy Items This Week

New Tax Disclosures Paint a Murky Picture Whose Impact Remains to Be Seen – Mindy Herzfeld, Tax Notes ($):

For public companies that follow a calendar year, their 2025 financial statements that began to be released in January are the first ones that must follow the new rules; for non-calendar-year reporters, the information may not be available for a while. Private companies have an additional year before the requirements apply. The disclosures provide substantial new information about the tax payments and operations of many companies. Some news reporters, as well as progressive advocacy groups, are using the data to highlight cases of U.S. companies paying little tax in this country — sometimes less than they’re paying elsewhere. To date, these reports have received little attention from politicians. But when the legislative focus returns to tax reform, U.S. companies’ global tax profiles and the data on what drives differences between statutory and effective rates may influence politicians’ views.

What the IEEPA Tariff Refund Process Can Learn from Transfer Pricing – Chad Martin, Eide Bailly:

At its core, an IEEPA tariff refund is not new income--it is the recovery of a cost that should never have existed. In many supply and value chains, the IOR did not ultimately bear the cost of the IEEPA tariffs. Those costs were commonly embedded in downstream pricing, absorbed by entrepreneurial entities through reduced margins, or by end consumers through higher prices. Shouldn’t the income from refunded duties therefore be allocated in a manner that equitably reverses the actual economic burden of the tariff, rather than simply accruing to the first participant in the payment chain – often a company that did little more than put its name and account number on a piece of paper?

Int'l Tax In April: Progress On Tariff Refunds, New Tax Cuts – Molly Moses, Law360 Tax Authority ($):

U.S. Customs and Border Protection continued to make progress in April on its system for paying back the tariffs imposed under the International Emergency Economic Powers Act even as President Donald Trump announced new measures targeting drug importers.

The first refunds of the IEEPA tariffs struck down by the U.S. Supreme Court in February are expected May 11, according to the U.S. Court of International Trade. The update from the court came at the end of a month that began with an announcement of new tariffs on imported pharmaceutical products under a provision of the Trade Expansion Act.

Liberty Global Has Tax Pros Fretting Over Planning Uncertainty – Kristen A. Parillo and Michael Smith, Tax Notes ($):

Because the panel majority’s April 21 decision didn’t provide a clear test for when the doctrine is relevant under section 7701(o), some observers think the decision could create a broad path for the IRS and other courts to invalidate complex transactions that rely on the literal language of tax code provisions.

According to several tax professionals who spoke with Tax Notes, the majority’s holding that section 7701(o) is relevant “to attempts by taxpayers to mechanically utilize the provisions of the Tax Code to obtain a benefit not intended by Congress” ignores the statute’s explicit instruction that the doctrine applies only if a threshold relevancy test is met.

The majority’s analysis “keeps the economic substance doctrine on a collision course with textualism,” said Nathaniel S. Pollock of SouthBank Legal.

EU Tells US Trade Deal Should be Adopted by July Deadline – Jorge Valero, Bloomberg Tax ($):

EU trade chief Maros Sefcovic conveyed the message to US Trade Representative Jamieson Greer during a meeting on Tuesday in Paris, according to a spokesperson from the European Commission, the EU’s executive arm.

“It would be beneficial for the main features of the deal to be in place ahead of its one-year anniversary,” the spokesperson said.

The US and EU are on the cusp of another trade blow up after President Donald Trump said he would slap 25% tariffs on European cars and trucks, accusing the bloc of failing to honor its prior commitments.

Trump is frustrated that the EU is taking months to formally ratify a trade deal the two sides initially reached last July. But the EU insists it is simply going through its legislative process and aims to approve the agreement in June.

Public Domain Superhero of the Week

Every week, a new character from the Golden Age of Comics, who’s fallen out of use.

This week’s entry: The Scarlet Phantom

Debut Year: 1943

Debut Publication: All-New Short Story Comics #2

Origin Story: An ace reporter whose father was murdered, he seeks vengeance using a "phantom cloak" he invented before his death.

Superpowers: The cloak allows him to become invisible--like a phantom.

Eide Bailly's International Tax Team and our affiliates at HLB, The Global Advisory and Accounting Network, stand ready to assist with your worldwide tax needs.