The OECD's Inclusive Framework on BEPS has been continuously evolving to address key terms for an agreement on a two-pillar approach to help address tax avoidance, ensure coherence of international tax rules, and, ultimately, a more transparent tax environment. Today, BEPS 2.0 also looks to address the challenges arising from the taxation of the digital economy.

KPMG professionals can help clients assess the likely impact of the BEPS 2.0 reform package, determine how to access the financial data that will be needed to comply, and restructure operations given the law changes in many countries.

Here we provide information on PIllar One and Pillar Two, including a comprehensive collection of tax-related thought leadership, webcasts and news to help organizations understand the potential impacts of BEPS on multinational organizations globally.

Overview of Pillar One


Pillar One, which applies to large multinationals, will reallocate certain amounts of taxable income to market jurisdictions, resulting in a change in effective tax rate and cash tax obligations, as well as an impact on current transfer pricing arrangements. Clients should assess the long-term impact of these changes, as the Organisation for Economic Co-operation and Development (OECD) intends to increase the number of entities subject to Pillar One over time.

For Amount A of Pillar One, the Inclusive Framework is launching a public consultation that will occur in stages by releasing working documents on each building block in order to remain within the political timetable agreed in October 2021. For Amount B of Pillar One, a public consultation document will be issued in mid-2022, with a public consultation event to follow the comment period.

Insights on Pillar One

  • These changes are multinational in scope and, despite simplification compared to previous proposals, remain technically complex.
  • Digital Services Taxes and other similar measures are to be repealed under the agreement, but identification and timetable are not yet clear.
  • The scope of covered businesses has moved far from the original intention of highly digitalized business models. Extractives and regulated financial services are exempt, but other industries are generally in scope.
  • The IF statement provided much certainty with respect to Pillar One, but many details remain outstanding. The expectation is that the rules will be finalized in 2022 and take effect beginning in 2023.

Overview of Pillar Two


Pillar Two aims to ensure that income is taxed at an appropriate rate and has a number of complicated mechanisms to ensure this tax is paid. The rules are complex and will require substantial new forms of financial data that tax departments may not currently have access to within their organization.

On 20 December 2021, the OECD/G20 Inclusive Framework (IF) on Base Erosion and Profit Shifting (BEPS) released Model Global Anti-Base Erosion (GloBE) rules (Model Rules) under Pillar Two. These Model Rules set forth the “common approach” for a Global Minimum Tax at 15% for Multinational Enterprises with a turnover of more than EUR750 million. Commentary related to the Model Rules was released on 14 March 2022. Timing in relation to the introduction of the new rules is currently uncertain. The earliest timeframe being considered is for the rules to be effective in 2023 for the Income Inclusion Rule (IIR) and 2024 for the Undertaxed Payments Rule (UTPR).

Insights on Pillar Two

  • The IF aims to bring the Pillar Two rules into law in 2022, to be effective in 2023, although the effective date of the UTPR will be delayed for one year.
  • Following the 20 December 2021 release of the Model Rules, the European Commission published a proposed European Union Directive to incorporate Pillar Two rules into EU law that would expand the scope of the Pillar Two rules to wholly domestic groups located in the EU, along with certain other modifications to the Model Rules.
  • The Model Rules did not include a model Subject to Tax Rule (STTR) treaty provision, which is expected to be developed in early 2022. A multilateral instrument will be developed by mid-2022 to facilitate implementation of the STTR in relevant bilateral treaties, and by the end of 2022, an implementation framework will be developed that facilitates the coordinated implementation of the GloBE rules.
  • A number of uncertainties remain, but Pillar Two is likely to be a radical shift in the tax landscape.

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