The G7’s announcement regarding a potential exemption for some US-based multinationals from certain aspects of Pillar Two has made waves, but what does it mean for large multinationals headquartered in Asia, Europe, Australia, and beyond? To provide clarity, Jacob Fulton, Head of the Quantitative Tax Practice for Orbitax, shared his insights in an interview with the Thomson Reuters.
Question: The G7’s announcement about a Pillar Two exemption for US-based multinationals has sparked global debate. Jacob, what does this mean for large companies based in Asia, Europe, Australia, and other regions outside the US?
Fulton: It’s definitely a headline-maker, but it’s important to realise that for multinationals headquartered outside the US, all existing Pillar Two rules remain firmly in place at this time. So, for large companies in Asia, Europe, Australia, and elsewhere, compliance and reporting obligations aren’t going away—if anything, they may become even more demanding.
Question: How should tax departments in these regions approach Pillar Two compliance in light of the G7’s announcement?
Fulton: The G7’s informal understanding doesn’t override the legislation that’s already been enacted in more than 50 jurisdictions. For tax years 2024 and 2025, large multinationals outside the US are still subject to the same compliance and reporting requirements as before. Pressing pause or delaying implementation in response to the announcement would be risky and could leave companies noncompliant if nothing actually changes. If changes to legislation are made, it’s also more likely that the adjustments are prospective, so 2024 and 2025 requirements would still apply.
Question: Is there room for tax planning or strategy changes as a result of the G7 announcement?
Fulton: I wouldn’t recommend it. The uncertainty actually makes tax planning more complicated, not less. Pillar Two’s transition rules are designed to prevent companies from exploiting gaps during rollout, and any new guidance could even target retroactive planning. Until there’s more clarity, companies should be cautious and avoid making major planning decisions based on speculation.
Question: Beyond the exemption, what broader challenges does Pillar Two pose for large multinationals outside the US right now?
Fulton: Pillar Two was meant to create a global minimum tax, but in practice, we’re seeing a patchwork of rules and timelines. Each country—whether it’s Germany, Japan, Australia, or Singapore—has adopted its own approach. 140+ countries who have agreed to Pillar 2 need to also adopt the exemption of US groups. If only some countries adopt the exemption for US groups, or they adopt exemption in different periods, multinationals elsewhere will face a maze of inconsistent rules and extra compliance requirements. This increases the risk of errors and duplicative reporting. Robust technology solutions are becoming essential to manage calculations, track legislative changes, and handle complex reporting.
Question: Will the compliance burden decrease for large multinationals outside the US?
Fulton: Doesn’t seem like it. The G7 announcement doesn’t simplify things—it adds another layer of complexity. Even if some countries grant relief to US groups, others may not, so multinationals in Asia, Europe, Australia, and elsewhere should be ready for additional filings and ongoing compliance in multiple regions. Local requirements like enhanced QDMTT reporting may apply regardless of whether there’s a tax liability. The compliance workload is unlikely to decrease any time soon.
Question: Given this environment, what should tax departments at these companies be doing now?
Fulton: Stay the course with your current Pillar Two compliance and implementation plans. Keep up with local legislation, maintain solid documentation, and be prepared for reporting wherever you operate. Investing in technology is more important than ever—it will help you keep pace with evolving rules and streamline your reporting. And don’t go it alone: stay engaged with advisors and industry groups, and be ready to adapt as new guidance emerges.
Question: Any final advice for large multinationals outside the US as they navigate this shifting landscape?
Fulton: The G7’s announcement is not a new law, and it doesn’t change the immediate reality for multinationals. The best approach is to continue preparing, invest in robust technology, and remain vigilant for further developments. Flexibility and readiness to adapt will be essential as Pillar 2 evolves and compliance obligations remain high.
Despite the G7 statement regarding US exemption from Pillar Two, we see that global minimum tax is shifting from concept to cadence. In the past two months, Governments across the globe are publishing rules, wiring the tech, opening registrations, and locking in deadlines. With enough jurisdictions now live and coordinating, the global minimum tax is moving from headline to habit. Pillar 2 is becoming business-as-usual, but ‘usual’ now means automated data flows, jurisdiction-aware calculation logic, and audit-ready reporting as well as compliance. Investing in the right technology—like Orbitax GMT, integrated with ONESOURCE Tax Provision—helps break through the complexities, helping tax teams stay compliant, reduce risk, and operate with speed and precision as GMT continues to advance.
