This lesson examines the compliance and administrative framework for Pillar Two, including the GloBE Information Return, the Multilateral Competent Authority Agreement for exchange of information, and the ongoing administrative guidance issued by the OECD.

• The GloBE Information Return (GIR): The GIR is a standardised information return designed to facilitate compliance with and administration of the GloBE Model Rules. The GIR sets out a comprehensive set of data points required for a tax authority to evaluate the correctness of a business’ calculation of its top-up tax liabilities in each jurisdiction. The GIR includes sections on the business in general, corporate structure, application of jurisdictional safe harbours, detailed calculations of Pillar Two income and losses, adjusted covered taxes, effective tax rates, and allocation of top-up tax liabilities.

• Central Filing and Exchange: An MNE group is not required to file the GIR locally if a GIR is filed by the Ultimate Parent Entity or Designated Filing Entity that has a Qualifying Competent Authority Agreement in effect with the respective jurisdiction. The GIR MCAA details the automatic exchange of GIR information within three months after the filing deadline based on Article 6 of the Convention on Mutual Administrative Assistance in Tax Matters.

• Basis for Completing the GIR: In principle, the GloBE Model Rules should be used for determining the GIR data points to ensure that the data points are completed based on a single source of information. However, if there are differences in local legislation and the Model Rules, the guidance requires MNE groups to report the impact of those differences in the GIR. If just one jurisdiction has Pillar Two taxing rights in respect of a particular jurisdiction (e.g., due to QDMTT Safe Harbour), the GIR must be completed based on local legislation.

• Transitional Penalty Relief: Annex C sets out a common understanding by jurisdictions on transitional penalty relief. This requires tax authorities to give “careful consideration” before applying penalties where a business has taken reasonable measures to apply the Pillar Two rules. Relief will apply for years beginning on or before 31 December 2026.