Pillar Two
Longview supports the calculation of ETR and top-up tax in support of the OECD’s BEPS Pillar Two model rules. Pillar Two apps, reports and administration can be found within the Global Transparency module in the Longview Client.
Overview of the Pillar Two process
The Pillar Two Model Rules are supported by several inputs, reports, and calculations. The basic flow of the process is:
- Source trial balance data is imported.
- Your system may have additional source data imports.
- If you are using Tax Provision,
- Automations that use source trial balance will execute.
- Tax inputs will trigger additional tax calculations.
- GloBE Temporary Differences will populate with provision balances for deferred tax accounts.
- GloBE Income will be populated using any configured automation.
- GloBE Covered Taxes will be populated using any configured automation.
- GloBE Temporary Differences adjustments will be populated using any configured automation.
- Optionally use GloBE Revenue to enter the GloBE Revenue for each constituent entity.
- This can be used as part of the de minimis test for a jurisdiction.
- Use GloBE Income to enter any manual inputs to GloBE Income for each constituent entity.
- Use GloBE Temporary Differences to enter any manual adjustments to temporary differences for Pillar Two.
- Use Adjusted Covered Taxes to enter any manual inputs to Covered Taxes for each constituent entity.
- The ETR and Top-up Tax Percentage will be calculated automatically by an event.
- The results of these calculations are stored by jurisdiction in the related jurisdiction calculation entity.
- Use Substance-Based Income Exclusion to enter gross values to support the calculation of the substance-based income exclusion.
- The substance-based income exclusion will be calculated and applied to the top-up tax calculation.
-
Invisible: New for v24.4If QDMTT is applicable to the jurisdiction:
- Adjust Income for any differences in QDMTT rules for the jurisdiction.
- Adjust Covered Taxes for any differences in QDMTT rules for the jurisdiction.
- The ETR and Top-up Tax Percentage will be calculated automatically by an event.
- The results of these calculations are stored by jurisdiction in the related jurisdiction calculation entity.
- Adjust Substance-Based Income Exclusion for any differences in QDMTT rules for the jurisdiction.
- The substance-based income exclusion will be calculated and applied to the top-up tax calculation.
- Use Top-up Tax to adjust the top-up tax payable under QDMTT.
The adjusted top-up tax is automatically applied as a deduction in GloBE top-up tax.
- Use Top-up Tax to make any allowed adjustments to the Top-up tax for the jurisdiction.
- Jurisdictional top-up tax is allocated to constituent entities with GloBE Income automatically.
- Use Allocated Top-up Tax to review the Top-up tax allocated to constituent entities.
Transitional Safe Harbours
A starter kit is provided with Longview Pillar Two to deploy hierarchies, events, and apps to support transitional safe harbours.
The starter kit contains the following items:
- A deployment app.
- An adjustment app to enter adjustments to transitional safe harbour values at a jurisdictional level.
- A report app to review transitional safe harbours across jurisdictions.
- An event to transfer source values into the transitional safe harbour accounts.
Before deploying the starter kit, modifications may be required depending on the functionality included in your system.
For further information, see "Deploying the transitional safe harbour starter kit".
Minimum Rate
The minimum rate is set at 15%, but an input app has been provided to support potential future rate changes. You can set the minimum rate using:
- P2501 – Minimum Tax Rate input app found in Global Transparency > Data Collection > Pillar Two > Rates.
The minimum rate is set on install and copied forward during rollover.
Invisible: New for v24.4QDMTT Minimum Rate
The minimum rate is set at 15%, but an input app has been provided to support potential future rate changes. You can set the minimum rate using:
- QD501 – Minimum Tax Rate input app found in Global Transparency > Data Collection > QDMTT > Jurisidctions
The minimum rate is copied forward during rollover.
Note: QDMTT Minimum Rate input will not be available for any jursidiction that does not have QDMTT selected in Applicable Rules within Manage Jurisdiction Elections.
GloBE Revenue
The computation of GloBE Revenue is supported by:
- P2210 – GloBE Revenue input app found in Global Transparency > Data Collection > Pillar Two > Constituent Entities.
- P2200 – GloBE Revenue report found in Global Transparency > Reports > Pillar Two > Constituent Entities.
The accounts for GloBE Revenue are named and ordered using the articles outlined in section 3 of the OECD’s GloBE Model Rules for Pillar Two.
Input
Specific accounts within the input app will be protected based on elections taken for the jurisdiction the entity resides in, or the entity itself if it is stateless.
Election |
Accounts Protected |
|---|---|
3.2.8 Consolidation Adjustment Election |
3.2.8 - Election to consolidate transactions in same jurisdiction and its descendants, if election is not taken |
Report
The GloBE Revenue report allows you to review the GloBE Revenue for:
- A constituent entity
- A stateless constituent entity
- A jurisdiction
- The total of all jurisdictions
GloBE Income
The computation of GloBE income or loss is supported by:
- P2200 – GloBE Income input app found in Global Transparency > Data Collection > Pillar Two > Constituent Entities.
- P2200 – GloBE Income report found in Global Transparency > Reports > Pillar Two > Constituent Entities.
The accounts for GloBE Income are named and ordered using the articles outlined in section 3 of the OECD’s GloBE Model Rules for Pillar Two.
Input
Specific accounts within the input app will be protected based on elections taken for the jurisdiction the entity resides in, or the entity itself if it is stateless.
Election |
Accounts Protected |
|---|---|
[3.2.1] Debt Release election |
3.2.1 - Debt Releases and its descendants, if election is not taken |
3.2.2 Stock Based Compensation |
3.2.2 - Stock-based Compensation and its descendants, if election is not taken |
3.2.5 Realisation Principle Election |
3.2.5 - Election to use realisation method in lieu of fair value accounting and its descendants, if election is not taken |
3.2.6 Aggregate Asset Gain Election |
3.2.6 - Election to spread aggregate asset gains over five years, and its descendants, if election is not taken |
3.2.8 Consolidation Adjustment Election |
3.2.8 - Election to consolidate transactions in same jurisdiction and its descendants, if election is not taken |
[7.6] Taxable distribution method election |
7.6.1 - Taxable Distribution Method Election, if election is not taken |
Additionally, accounts configured for automation will be protected from input. See Managing GloBE income automations for more information.
Report
The GloBE Income report allows you to review the GloBE Income for:
- A constituent entity
- A stateless constituent entity
- A jurisdiction
- The total of all jurisdictions
Invisible: New for v24.4QDMTT Income
The computation of QDMTT income or loss is supported by:
- QD200 – QDMTT Income input app found in Global Transparency > Data Collection > QDMTT > Constituent Entities.
- QD200 – QDMTT Income report found in Global Transparency > Reports > QDMTT > Constituent Entities.
Input
QDMTT Income is entered as an adjustment to the GloBE Income. The GloBE Income amounts are displayed and not editable, with an adjustment column available to apply any adjustments required. Any GloBE elections taken will also be applied.
Note: QDMTT Income input will not be available for any entity that is in a jursidiction that not have QDMTT selected in Applicable Rules within Manage Jurisdiction Elections.
Report
The QDMTT Income report allows you to review the QDMTT Income for:
- A constituent entity
- A stateless constituent entity
- A jurisdiction
The total of all jurisdictions
The report displays the GloBE Income amounts, QDMTT adjustments, and QDMTT adjusted values.
GloBE Temporary Differences
The computation of temporary differences is supported by:
- P2310 – GloBE Temporary Differences input app found in Global Transparency > Data Collection > Pillar Two > Constituent Entities.
- P2310 – GloBE Temporary Differences report found in Global Transparency > Reports > Pillar Two > Constituent Entities.
The accounts for Temporary Differences are named and ordered using the articles outlined in section 4 of the OECD’s GloBE Model Rules for Pillar Two. GloBE temporary differences provides a mechanism to:
- Show temporary differences per provision and at the global minimum rate to facilitate the calculation of any recast adjustment.
- Adjust deferred taxes below the temporary differences.
- Use the temporary difference adjustments as a source for automation of amounts within covered taxes.
Provision temporary differences are populated in Pillar Two with the element mapping outlined in the following tables.
Gross balance element mapping:
Target Element |
Source Element ASC |
Source Element IAS |
|---|---|---|
P2BoY – Beginning of year |
GrsBOY_ASC |
GrsBOY_IAS |
P2BS – Balance sheet movements |
GrsAcqCur_ASC GrsAcqPR_ASC GrsDisp_ASC |
GrsAcqCur_IAS GrsAcqPR_IAS GrsDisp_IAS |
P2PY – Prior year adjustments |
GrsPY_ASC |
GrsPYAdj_IAS GrsRTPCurDfd_IAS |
P2CY – Income statement |
GrsCY_ASC GrsPYAdjDfd_ASC GrsRTPDfd_ASC GrsRARDfd_ASC GrsCurDfd_ASC GrsDfd_ASC GrsTrfrCurDfd_ASC GrsTrfrDfd_ASC GrsUDiff_ASC |
GrsCY_IAS GrsCYOthCurDfd_IAS GrsCYOthDfd_IAS GrsCYTrfr_IAS GrsUDiff_IAS |
P2OCI – OCI |
GrsNPOCI_ASC GrsNPOCIOth_ASC GrsRTPNPOCIDfd_ASC |
GrsOCI_IAS GrsOCIOth_IAS GrsRTPOCICurDfd_IAS GrsCTABOY_IAS GrsCTACY_IAS |
P2Eq – Equity |
GrsNP123_ASC GrsNPOth_ASC GrsNPEqOth_ASC GrsRTPNPEqDfd_ASC GrsUDiffEq_ASC |
GrsEq_IAS GrsEQOth_IAS GrsRTPEqCurDfd_IAS GrsUDiffEq_IAS |
P2CTA - CTA (ASC only) |
GrsCTABOY_ASC GrsCTACY_ASC |
Net balance element mapping:
Target Element |
Source Element ASC |
Source Element IAS |
|---|---|---|
P2BoY – Beginning of year |
NetNBOY_ASC NetNBRBOY_ASC |
NetNBOY_IAS NetNDTNRPY_IAS NetNBRBOY_IAS |
P2BS – Balance sheet movements |
NetNRCAcqP_ASC NetNRCAcqC_ASC NetNDisp_ASC |
NetNAcqPR_IAS NetNAcqCur_IAS NetNDisp_IAS |
P2PY – Prior year adjustments |
NetNPY_ASC NetNBRPY_ASC |
NetNPYAdj_IAS NetNRTPCurDfd_IAS NetNBRPY_IAS |
P2CY – Income statement |
NetNCY_ASC NetNPYAdjDfd_ASC NetNRTPDfd_ASC NetNRARDfd_ASC NetNCurDfd_ASC NetNDfd_ASC NetNTrfrCurDfd_ASC NetNTrfrDfd_ASC NetNUDiff_ASC NetNBRDP_ASC NetNAcqPR_ASC NetNAcqCur_ASC |
NetNCY_IAS NetNCYOthCurDfd_IAS NetNCYOthDfd_IAS NetNCYTrfr_IAS NetNUDiff_IAS NetNBRCYT_IAS |
P2CYRC - Current Year Rate Change |
NetNRCBOY_ASC NetNBRRCBOY_ASC NetNRCCY_ASC NetNBRRCCY_ASC NetNRCAcqPR_ASC NetNRCAcqCR_ASC |
NetNRCBOY_IAS NetNBRRCBOY_IAS NetNRCCY_IAS NetNBRRCCY_IAS NetNRCAcqP_IAS NetNRCAcqC_IAS NetNRCAcqPR_IAS NetNRCAcqCR_IAS |
P2CYDTNR - Change in DTNR (IAS only) |
NetNDTNRChg_IAS | |
P2OCI – OCI |
NetNNPOCI_ASC NetNRTPNPOCIDfd_ASC NetNNPOCIOth_ASC NetNBRNPOCI_ASC NetNNPOCIRCBOY_ASC NetNBRNPOCIRCBOY_ASC NetNNPOCIRCCY_ASC NetNBRNPOCIRCCY_ASC |
NetNOCI_IAS NetNRTPOCICurDfd_IAS NetNDTNRCOCI_IAS NetNOCIOth_IAS NetNOCIRCBOY_IAS NetNBROCIRCBOY_IAS NetNOCIRCCY_IAS NetNBROCIRCCY_IAS NetNBROCI_IAS NetNCTABOY_IAS NetNCTACY_IAS |
P2Eq – Equity |
NetNNPOth_ASC NetNRTPNPEqDfd_ASC NetNNPEqOth_ASC NetNUDiffEq_ASC NetNBRNPEq_ASC NetNNPEqRCBOY_ASC NetNBRNPEqRCBOY_ASC NetNNPEqRCCY_ASC NetNBRNPEqRCCY_ASC |
NetNRTPEQCurDfd_IAS NetNDTNRCEq_IAS NetNEQOth_IAS NetNUDiffEq_IAS NetNEqRCBOY_IAS NetNBREqRCBOY_IAS NetNEqRCCY_IAS NetNBREqRCCY_IAS NetNBREq_IAS |
P2CTA - CTA (ASC only) |
NetNCTABOY_ASC NetNCTACYR_ASC |
Input
Specific symbols within the input app will be protected:
Symbol |
Note |
|---|---|
P2TMP4.1.1 – Temporary Differences per Provision (ACCOUNTS) |
Temporary Differences per Provision and its descendants, as these values come from tax provision calculations. |
P2NetP2 – Net per Pillar Two (DETAILS) |
Net per Pillar Two Minimum Rate is calculated as follows:
|
P2NetTP - Net per Provision (DETAILS) |
Net per Provision is calculated from the provision temporary differences. For all other adjustments, you may enter values for this detail. |
P2Recast – Recast Adjustment |
The recast adjustment is calculated for gross temporary differences as the difference between the net per pillar two and net per provision. The recast adjustment is open for input for any temporary differences that are not entered as gross and all other pillar two adjustments. |
Additionally, accounts configured for automation will be protected from input. For more information, see Managing GloBE temporary difference automations.
Report
The GloBE Temporary Differences report allows you to review the GloBE Temporary Differences for:
- A constituent entity
- A stateless constituent entity
- A jurisdiction
- The total of all jurisdictions
GloBE Adjusted Covered Taxes
The computation of adjusted covered taxes is supported by:
- P2300 – GloBE Adjusted Covered Taxes input app found in Global Transparency > Data Collection > Pillar Two > Constituent Entities.
- P2300 – GloBE Adjusted Covered Taxes report found in Global Transparency > Reports > Pillar Two > Constituent Entities.
The accounts for Adjusted Covered Taxes are named and ordered using the articles outlined in section 4 of the OECD’s GloBE Model Rules for Pillar Two.
Input
Specific accounts withing the input app will be protected based on elections taken for the jurisdiction the entity resides in, or the entity itself if it is stateless.
Election |
Accounts Protected |
|---|---|
4.5 GloBE Loss Election |
3 4.1.2.b - GloBE Loss Deferred Tax Asset used (4.5 election) and its descendants, if election is not taken |
4.5 GloBE Loss Election |
4.4 - Covered Taxes - Deferred and its descendants, if election is taken |
7.3.1 Deemed Distribution Tax Election |
7.3.1 - Deemed Distribution Tax, and its descendants, if election is not taken |
Additionally, accounts configured for automation will be protected from input. See Managing GloBE adjusted covered tax automations for more information.
Report
The GloBE Adjusted Covered Taxes report allows you to review the GloBE Adjusted Covered Taxes for:
- A constituent entity
- A stateless constituent entity
- A jurisdiction
- The total of all jurisdictions
Invisible: New for v24.4QDMTT Adjusted Covered Taxes
The computation of QDMTT covered taxes is supported by:
- QD300 – QDMTT Adjusted Covered Taxes input app found in Global Transparency > Data Collection > QDMTT > Constituent Entities.
- QD300 – QDMTT Adjusted Covered Taxes report found in Global Transparency > Reports > QDMTT > Constituent Entities.
Input
QDMTT Adjusted Covered Taxes is entered as an adjustment to the GloBE Adjusted Covered Taxes. The GloBE Adjusted Covered Taxes amounts are displayed and not editable, with an adjustment column available to apply any adjustments required. Any GloBE elections taken will also be applied.
Note: QDMTT Adjusted Covered Taxes input will not be available for any entity that is in a jursidiction that not have QDMTT selected in Applicable Rules within Manage Jurisdiction Elections.
Report
The QDMTT Covered Taxes report allows you to review the QDMTT Covered Taxes for:
- A constituent entity
- A stateless constituent entity
- A jurisdiction
- The total of all jurisdictions
The report displays the GloBE Adjusted Covered Taxes amounts, QDMTT adjustments, and QDMTT adjusted values.
GloBE ETR and Top-up Tax Percentage
ETR and Top-up tax percentage is calculated by event calculations for each included Jurisdiction and Stateless Constituent entity using the values entered for GloBE Income and Adjusted Covered Taxes.
The top-up tax percentage is the greater of:
- Zero, and
- "Minimum tax rate" less “ETR”
ETR and Top-up Tax Percentage can be reviewed using:
- P2500 – Top-up Tax Percentage report found in Global Transparency > Reports > Pillar Two > Jurisdictions.
The Top-up Tax Percentage report allows you to review the Top-up tax percentage for:
- A stateless constituent entity
- A jurisdiction
Invisible: New for v24.4QDMTT ETR and Top-up Tax Percentage
ETR and Top-up tax percentage is calculated by event calculations for each included Jurisdiction and Stateless Constituent entity using the values entered for QDMTT Income and Adjusted Covered Taxes.
The top-up tax percentage is the greater of:
- Zero, and
- "Minimum tax rate" less "ETR"
ETR and Top-up Tax Percentage can be reviewed using:
- QD500 – Top-up Tax Percentage report found in Global Transparency > Reports > QDMTT > Jurisdictions.
The Top-up Tax Percentage report allows you to review the Top-up tax percentage for:
- A stateless constituent entity
- A jurisdiction
Substance-Based Income Exclusion
The computation of substance-based income exclusion is supported by:
- P2502 – Substance-based income exclusion rates input app found in Global Transparency > Data Collection > Pillar Two > Rates.
- P2205 – Substance-based income exclusion input app found in Global Transparency > Data Collection > Pillar Two > Constituent Entities.
- P2205 – Substance-based income exclusion report found in Global Transparency > Reports > Pillar Two > Constituent Entities.
P2502 Input
Input the substance-based income exclusion rate applicable for payroll and tangible assets. Rates are defined in section 9.2 of the OECD’s Pillar 2 Model Rules and change by year until 2033, when they reach the prescribed 5% mark.
P2205 Input
The input app is not available for entities in jurisdictions or stateless entities that have taken the 5.3.1 election to not apply the substance-based exclusion.
Accounts in the input app are included to:
- Capture gross payroll and tangible asset amounts for a constituent entity.
- Capture any adjustments required for permanent establishments and flow-through entities under articles 5.3.6 and 5.3.7.
- Display the current rates for payroll carve-out and tangible asset carve-out amounts.
- Display the amount of substance-based income exclusion generated by the entity.
Report
The Substance-based Income Exclusion report allows you to review the amounts for:
- A constituent entity
- A jurisdiction
- The total of all jurisdictions
Invisible: New for v24.4QDMTT Substance-Based Income Exclusion
The computation of QDMTT substance-based income exclusion is supported by:
- QD502 – Substance-based income exclusion rates input app found in Global Transparency > Data Collection > QDMTT > Jurisdictions.
- QD205 – QDMTT Substance-Based Income Exclusion input app found in Global Transparency > Data Collection > QDMTT > Constituent Entities.
- QD205 – QDMTT Substance-Based Income Exclusion report found in Global Transparency > Reports > QDMTT > Constituent Entities.
QD502 Input
Input the substance-based income exclusion rate applicable for payroll and tangible assets for QDMTT in the jurisdiction.
Note: QD502 input will not be available for any jursidiction that does not have QDMTT selected in Applicable Rules within Manage Jurisdiction Elections.
QD205 Input
QDMTT Substance-Based Income Exclusion is entered as an adjustment to the GloBE Substance-Based Income Exclusion. The GloBE Adjusted Covered Taxes amounts are displayed and not editable, with an adjustment column available to apply any adjustments required. Any GloBE elections taken will also be applied.
Note: QD205 input will not be available for any entity that is in a jursidiction that not have QDMTT selected in Applicable Rules within Manage Jurisdiction Elections.
Report
The QDMTT Substance-Based Income Exclusion report allows you to review the QDMTT Substance-Based Income Exclusion for:
- A constituent entity
- A stateless constituent entity
- A jurisdiction
- The total of all jurisdictions
The report displays the GloBE Substance-Based Income Exclusion amounts, QDMTT adjustments, and QDMTT adjusted values.
Adjusted Jurisdictional Top-up Tax
The computation of adjusted Jurisdictional Top-up Tax is supported by:
- P2510 – Top-up Tax input app found in Global Transparency > Data Collection > Pillar Two > Jurisdictions.
- P2510 – Top-up Tax report found in Global Transparency > Reports > Pillar Two > Jurisdictions.
Input
Specific accounts withing the input app will be protected based on elections taken for the jurisdiction the entity resides in, or the entity itself if it is stateless.
Election |
Accounts Protected |
|---|---|
5.3.1 Do Not Apply Substance-Based Income Exclusion |
Aggregate Substance-based income exclusion |
Report
The Adjusted Jurisdictional Top-up Tax report allows you to review the Top-up taxes for:
- A stateless constituent entity
- A jurisdiction
- The total of all jurisdictions
Invisible: New for v24.4QDMTT Adjusted Top-up Tax
The computation of QDMTT adjusted Top-up Tax is supported by:
- QD510 – Top-up Tax input app found in Global Transparency > Data Collection > QDMTT > Jurisdictions.
- QD510 – Top-up Tax report found in Global Transparency > Reports > QD510 > Jurisdictions.
Input
Specific accounts withing the input app will be protected based on elections taken for the jurisdiction the entity resides in, or the entity itself if it is stateless.
Election |
Accounts Protected |
|---|---|
5.3.1 Do Not Apply Substance-Based Income Exclusion |
Aggregate Substance-based income exclusion |
Note: QDMTT Top-up Tax input will not be available for any jursidiction that does not have QDMTT selected in Applicable Rules within Manage Jurisdiction Elections.
Report
The Adjusted Jurisdictional Top-up Tax report allows you to review the Top-up taxes for:
- A stateless constituent entity
- A jurisdiction
- The total of all jurisdictions
Allocated Top-up Tax
Once top-up tax is calculated for a jurisdiction it is allocated to the constituent entities members of the jurisdiction that have GloBE Income. The allocated top-up tax report allows you to review the top-up tax allocated for:
- The constituent entities of a jurisdiction
- All constituent entities across all jurisdictions
The report is presented with the allocated top-up tax accounts across and the entities down. By default, the entities will be collapsed to the selected jurisdiction. Click on the jurisdiction to expand it to view the constituent entities. Currently, values are calculated only for top-up tax allocated under section 5.2.4 of the model rules.