Jelena Mihic
Managing Director at Kreston MDM Serbia
A new phase for Pillar Two: From modelling to execution
March 30, 2026
Multinational enterprises are entering a critical phase in Pillar Two implementation, where execution and data readiness are becoming as important as technical interpretation. In this article for International Tax Review, Jelena Mihić Munji, Chair of the Kreston Global Europe Committee, discusses the OECD’s ‘side-by-side’ consolidation package, which marks a decisive shift from theoretical modelling to practical application. Click here to read the full article, or find a summary below.
The package provides the technical bridge between domestic GloBE rules and the OECD framework. Without alignment between internal systems and these updated mechanics, organisations risk reconciliation discrepancies, double taxation, and increased audit exposure in their first reporting cycle.
Embedding compliance into day-to-day operations
The package effectively serves as a technical instruction manual, ensuring domestic minimum taxes (QDMTTs) and the income inclusion rule operate cohesively. As a result, tax teams must move beyond spreadsheet-based processes towards audit-ready calculation engines aligned with refined definitions of covered taxes.
This shift demands more granular, jurisdiction-level data and places greater responsibility on tax controllership and IT-tax functions. Ensuring data integrity and system readiness across jurisdictions is now central to compliance.
The guidance also introduces refinements to effective tax rate (ETR) calculations, particularly around deferred tax treatment and the handling of prior-year top-up taxes. Companies must closely monitor deferred tax positions, especially those unlikely to reverse within five years, and ensure correct allocation of taxes within group structures.
Data, systems and sector-specific challenges
Pillar Two significantly increases data requirements, making manual processes no longer viable. Organisations must enhance ERP and consolidation systems to capture GloBE-specific data points and adopt analytical tools to identify low-ETR jurisdictions and support timely, auditable reporting.
Sector-specific implications are notable:
- Manufacturing groups must strengthen asset tracking to support substance-based income exclusion calculations.
- Digital businesses face complexity in allocating income across jurisdictions and managing exposure where digital services taxes are not treated as covered taxes.
- Pharmaceutical companies must carefully assess the classification of R&D incentives, as treatment differences can materially impact ETR outcomes.
Consistency in financial data sources is also critical. Whether using consolidated or local accounts, organisations must apply their chosen basis consistently to avoid scrutiny.
Managing risk and preparing for implementation
Common risks include assuming local QDMTTs automatically align with OECD standards and failing to test sensitivity to adjustments such as transfer pricing changes. Early involvement of internal audit is essential to validate controls over data collection and reporting.
A structured implementation roadmap is key. Priorities for FY2026/27 include:
- Finalising data integration between ERP systems and GloBE engines
- Conducting dry runs using prior-year data
- Monitoring legislative developments in local QDMTTs
- Establishing robust reporting controls and provisioning processes
Tax teams should also maintain clear documentation on entity classification, deferred tax positions, and the qualification status of domestic minimum taxes.
Conclusion
The OECD side-by-side package completes the transition of Pillar Two from policy to practice. For MNEs, success will depend less on interpreting legislation and more on building robust, integrated systems to deliver accurate and timely compliance.
In this new environment, leading tax functions will treat GloBE as a data and governance challenge as much as a technical tax requirement.
For more information on doing business with Kreston Global, click here.
