If you work in the legal department or entity management, you may be seeing more emails from your colleagues in tax with “BEPS 2.0” and “Pillar Two” in the subject line. They may even include the red “urgent” exclamation point or the word “help!”

If you’re in global tax, you already have these terms on your radar, and you’re hoping for a timely, informed and complete response on this new regulatory requirement connected to the global 15% minimum tax.

Compliance involves complex rules, entity-specific information, current and historical data, details on intercompany transactions, scenario modeling and more.

Here’s what legal and tax departments, along with their corporate secretaries and CFOs, need to know about Base Erosion and Profit Shifting (BEPS) 2.0 and Pillar Two — and how entity management software can help manage these and other international tax regulations.

Many steps, scenarios and data points: A summary of BEPS 2.0 Pillar Two compliance

Participating jurisdictions approved the Organisation for Economic Co-operation and Development (OECD)/G20 rules on BEPS back in 2021. But 2024 is the year they will start their enforcement, and many are already well into this process.

 posed by multinational enterprises (MNEs) engaging in aggressive tax-planning strategies to shift profits to low-tax jurisdictions and avoid paying their fair share of taxes. BEPS 2.0 focuses on developing a global consensus on allocating taxing rights and ensuring that MNEs are taxed where they generate profits, regardless of their physical presence. It also aims to establish a more transparent and equitable international tax framework to prevent tax avoidance and promote tax certainty.

To ensure compliance, legal and corporate tax teams will need to work closely together to determine:

Which entities fall within Pillar Two jurisdiction

If the combined revenues of these entities meet the threshold for BEPS 2.0 Pillar Two reporting

The effective tax rate (ETR) for each jurisdiction — is it greater than or less than 15%?

From there, your organization will need to:

“Top up” tax payments for those jurisdictions with ETRs of less than 15%

The data required for determining any additional “top up” liability is substantial, to say the least. It includes:

Incorporation, tax jurisdiction and ownership information for each legal entity

Any changes in ownership, accounting principles or functional currency

Third-party and intercompany transfers such as mergers, asset sales, business transfers and share transfers

Dividend and profit distributions, including amounts and dates

Dates and supporting documentation for all of the above

What’s more, these steps above involve just the basic nuts and bolts of BEPS 2.0 Pillar Two reporting. Forward-looking companies will want to conduct an internal health check across their jurisdictions first, followed by legal entity rationalization as necessary to optimize their tax profile. Any external consultants involved will almost certainly ask for the data above before they can start their work. Regardless of approach, the analysis requires even more staffing, resources and work across your organization, with a particular burden likely falling on corporate secretarial, governance, controllers and tax teams.

The right technology eases the BEPS 2.0 burden

How are you gathering, updating, verifying, storing and presenting all of this information? What about scenario modeling? Over what timeframes? Is your data consistent across jurisdictions? Is it up to date?

 goes a long way toward answering these and other key questions.

The data required for Pillar Two compliance crosses both entity structures and departments, from legal to financial to HR and beyond. Entity management software corrals this data all into one place, with permission-based access, built-in audit trails and secure storage. The benefits do not stop there. They include the ability to accomplish certain compliance filings electronically, with a time and date stamp, and can alert companies when certain data, such as director information, is out of date.

With a more sophisticated international entity management software, you’ll benefit from specialized features such as group structure visualizations, point-in-time organizational charts and scenario modeling. Throughout the process, templates, alerts, reminders and automated document assembly keep activities on track and on time.

Take the next step in getting your team, colleagues and organization BEPS 2.0 Pillar Two-ready. Download our Diligent 

Managing the legal/tax overlap of BEPS 2.0 Pillar Two: How entity management software can help 

For investor relations and general counsel departments at public companies in most markets, the start of a new year means preparing and releasing proxy statements. Also known as shareholder circulars in some countries, these documents supplement annual financial reports by disclosing information about a company’s governance, as well as listing management and shareholder-sponsored resolutions to be voted on at annual general meetings.

Diligent Market Intelligence (DMI) is the leading data provider for shareholder engagement, stewardship and corporate governance. Proxy statements and meeting results provide a rich picture of prevailing trends in these areas, especially when combined with our analytics and data visualization tools.

Below is a summary of what happened in the first quarter of 2024. The report can also be downloaded 

Shareholder activism proved robust in the first quarter of the new year, with 399 companies worldwide publicly subjected to new demands.

Although the total was down almost 10% from the same period last year, it was the second busiest start to a year since at least 2019 and much of the decline is explained by a slow start in Asia and Europe. Indeed, U.S.-basedcompanies subjected to activist demands rose more than 6%.

In the U.S., activists won more board seats than in any first quarter since 2021, according to DMI data.

However, a notable quirk in the data is that all 60 new directors were appointed as part of settlement agreements. No activist has yet succeeded in electing a new director in a contested vote, with the most high-profile proxy fight of the year so far ending with The Walt Disney Co. comfortably defeating Trian Partners.

The Strategic Organizing Center (SOC), a union pension fund coalition, withdrew its proxy contest at Starbucks before the vote in this year’s other big contest. That was expected to be the first ESG-focused proxy fight since the introduction of the universal proxy card in September 2022.

Elsewhere, there was a small increase in activist short selling, with investors that published reports designed to cause a target’s share price to fall increasing most notably in Europe.

While most companies hold their annual meetings in the second quarter, the early results suggest some promising trends. A smaller proportion of directors up for election or reelection received less than 70% support in most global markets than the full-year trend in previous years, according to DMI data. The same also ran true for non-binding votes on executive compensation.

DMI data also suggest that 2024 could be another busy year for ESG activism. The number of shareholder resolutions in the U.S. rose from 25 in Q1 2023 to 47 in the first three months of 2024.

More than 800 new director appointments were made globally in the first quarter of 2024, according to DMI. On average over the past three years, 40% of new director appointments were female, with the highest rate of female appointments made in 2021. However, in the first quarter of 2024, that number fell to 34%, driven mostly by North America. In Europe, 47% of new directors were female, only slightly down on previous years.

DMI continues to publish regular research reports on the latest trends in shareholder engagement, stewardship and corporate governance, as well as providing a searchable database allowing public company clients to benchmark their performance and governance, identify vulnerabilities and prepare a plan to defend themselves against activist attacks.

Our next report looks at the latest investor and regulatory demands on ESG, drawing on the events of the current proxy season. We will also be hosting a webinar with contributors to the report to mark its publication in early June.

Later in the year we will post our Proxy Season Review, the Q2 edition of the DMI Quarterly Snapshot and our executive compensation annual statistical report.

Looking for more help navigating proxy season? Read our 

 to request a demo of DMI’s full capabilities.

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Managing the legal/tax overlap of BEPS 2.0 Pillar Two: How entity management software can help

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Managing the legal/tax overlap of BEPS 2.0 Pillar Two: How entity management software can help

Shareholder Engagement in Q1 2024

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Your Data Matters

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