Pillar 2 Update Seminar: Pillar 2 is here to stay
On a bright, sunny day in Amstelveen, tax professionals gathered in the Willem Meijburg Paviljoen at KPMG Meijburg & Co for an engaging three-hour seminar on the latest developments in Pillar 2 implementation. The OECD’s Pillar 2 framework introduces a global minimum effective tax rate of 15% for large multinational enterprises. Hosted by Aroen Rambhadjan, Partner at KPMG Meijburg & Co, along with Lieke Mutsaers, International Tax Director, the event brought together passionate tax experts to discuss one pressing question: Is Pillar 2 about to break?
The panel featured distinguished experts including Alistair Pepper (KPMG US’s Washington National Tax Group), Vinod Kalloe (KPMG EMA Tax Policy Leader), Raluca Enache (Head of KPMG’s EU Tax Centre), Fred van Horzen (Dutch Tax Policy Leader / Of Counsel KPMG Meijburg & Co), and Janette Wilkinson (Partner, Tax KPMG UK and BEPS 2.0 Global Leader). The diverse panel offered global perspectives on the rapidly evolving tax landscape, particularly in light of recent US executive orders that have created uncertainty about the future implementation and enforcement of Pillar 2 globally.
Navigating disruption: Expert perspectives on Pillar 2
The atmosphere was one of both concern and determination as panelists navigated complex topics ranging from US-EU tax dynamics to the future of Digital Service Taxes and tax incentives. What became clear throughout the lively discussion was that the tax world is experiencing significant disruption, with new developments seemingly emerging every day. As Rambhadjan noted, “Every morning I wake up, I look at my phone thinking, ‘What’s new again today?’”
Despite the uncertainties, the seminar provided attendees with valuable insights, practical guidance, and thoughtful analyses on how to prepare for various scenarios in this changing landscape. The interactive format encouraged questions from the audience during workshops where tax professionals could share concerns and strategies for addressing the challenges ahead. Wilkinson concluded the panel discussion with a grounding perspective on Pillar 2 developments: “I think the train has left the station. Companies have no choice but to prepare and comply, but to keep a really close eye on all of these developments.”
Key Takeaways: The road ahead for tax professionals
- Pillar 2 is here to stay, with modifications
All panelists agreed that despite US concerns, Pillar 2 will continue, though with likely adjustments. As Pepper noted, “Pillar 2 is going to be tweaked around the edges to respond to the US concern.” Echoing this sentiment, Van Horzen acknowledged the framework’s persistence while suggesting possible structural changes: “Whether it will be the full-scale Pillar 2 or not remains to be seen. It could be that the UTPR disappears.” The fiscal position of many countries and the significant investment already made in implementation make complete abandonment unlikely.
- Comprehensive compromise package expected
“My take is there will be a package deal, Pillar 1, Pillar 2, perhaps some other tax elements included, maybe by the end of this year,” Kalloe predicted. This approach would aim to resolve multiple international tax disputes simultaneously, with the EU potentially willing to modify aspects of Pillar 2 to address US concerns while remaining firm on digital economy taxation. As negotiations progress, companies should stay alert for developments that could significantly impact their tax positions.
- Prepare while maintaining flexibility
Enache emphasized, “It’s really difficult for clients at this stage to do any preparation or scenario planning. But it’s very important for them to be aware of what is happening.” With 65 countries having already introduced Pillar 2 legislation, businesses must balance immediate compliance needs with the possibility of future changes. Companies face critical decisions about systems and approaches, as Wilkinson noted that compliance has become “kind of your license to operate in these countries.”
- Focus on tax incentives as positive opportunity
A silver lining amid the complexity is the growing importance of tax incentives. “Incentives are becoming more and more important,” Enache highlighted, advising clients to keep track of what incentives are available in each jurisdiction. Unlike the compliance burden of Pillar 2, incentives offer businesses much-needed breathing space in terms of cash flows, with many countries already introducing incentives designed to be Pillar 2-compatible."
- Advocacy is increasingly important
Pepper noted the contrast between US and European approaches to policy influence: “US multinationals have a history of advocacy. European multinationals are much more likely to take a ‘what happens, happens and then we respond’ approach.” He added: “It’s really important that people are actively getting in front of policymakers on both sides of the Atlantic.” The example of US auto manufacturers successfully negotiating tariff exemptions demonstrates how proactive engagement can shape outcomes in today’s rapidly evolving tax landscape.
Despite the uncertainties surrounding Pillar 2 implementation, the consensus among experts points to its continuation, albeit with potential modifications. Echoing this sentiment, Rambhadjan emphasized that “Pillar 2 is here to stay and is not dead”, though he acknowledged that there may be some exceptions made specifically to address US concerns. Companies must now balance immediate compliance needs with strategic flexibility, while staying alert to developments in incentives and advocacy opportunities.
For organizations navigating this complex landscape, KPMG Meijburg & Co offers a thorough and tailored approach to assist companies in understanding the complexities of Pillar 2 and meeting their compliance requirements. As the regulatory framework continues to evolve, the message is clear: while navigating these complex waters requires vigilance, the international tax community is not sailing entirely without a map.
