GloBE Information Return: What Multinationals Need to Know Now

As part of the OECD’s Pillar Two solution, the GloBE Information Return (GIR) introduces a standardized compliance reporting format to facilitate the exchange of information across participating jurisdictions. While the framework continues to evolve as the OECD provides additional guidance and jurisdictions fine-tune implementation, the GIR is steadily advancing. Understanding where it stands is essential to shaping your compliance strategy moving forward. Read on to discover how the GIR’s current status impacts your organization.

We’ll start by looking at two GIR formats released by the OECD: Data Elements and the Electronic Filing Schema.

Data Elements

In the OECD’s initial guidance on the GIR released July 2023, the inclusive framework included Annex A1: a series of tables in report format detailing datapoints tax administrations need to collect as part of the GIR. The tables were organized into three main sections:

1. Group Information
2. Safe Harbors
3. GloBE Computations

These sections emphasize the need for comprehensive data gathering and detailed computations across multiple areas.

Electronic Filing Schema

In July 2024, the Inclusive Framework released a Public Consultation Document for the GIR which included the first XML schema draft. The document requested comments and questions be submitted to the OECD by August 19, 2024. A final version of the schema is expected in the coming months, and companies will be required to file the GIR to tax administrations in 2026.

The OECD received public comments from various stakeholders including taxpayers, consulting firms, professional tax organizations, and vendors. Several common themes appeared in the feedback regarding clarifications or changes needed:

• Greater simplification of both calculations and the schema
• Creation of a centralized filing mechanism to avoid multiple filings in different jurisdictions
• Inclusion of Qualified Domestic Top-up Taxes (QDMTTs) in the GIR schema
• Coordination between the GIR and Country-by-Country Reporting (CbCR)
• More consistent application across jurisdictions
• Greater data security and validations
• Elimination of ownership change information
• Clarification of terms and definitions, including:
  • Definition of “subgroup”
  • Definition of “jurisdictions with taxing rights”
  • Inclusion of optional data
  • Use of taxpayer identification numbers (TINs)

What It Means

Since the introduction of Pillar Two, taxpayers have faced challenges identifying and gathering data. The size and complexity of the GIR schema only amplifies those challenges with its requirements around data granularity, volume, and transmission, as follows:

Granularity

The schema requires that details of GloBE Income and Covered Taxes be transmitted at a level lower than source systems make available. Taxpayers will need to retrieve data from their financial system and apportion/allocate it by adjustment to each entity’s inclusion amount. Those apportioned/allocated amounts must be stored in order to be transmitted.

Much of the data required for the GIR is consistent with data required for other tax accounting and compliance processes, but it must be organized differently. Breaking down the source data and comparing it to other tax processes will require an additional layer of reconciliation or validation.

Volume

For many taxpayers, the level of data required to be transmitted will be in the hundreds of thousands of records. In addition to all the GloBE Income and Covered Taxes components needed by entity and by jurisdiction, there are more than 100 additional informational qualitative elements included in the schema, also by entity and jurisdiction. 

Some of these data points duplicate data already collected and reported in Country-by-Country Reporting (CbCR). Other data points duplicate those required for other tax accounting and compliance processes, including QDMTTs.

MNEs must collect and organize this huge volume of data in a way that makes it:

• Useable in calculations
• Reviewable in the GIR format
• Consistent with other tax reporting requirements, including QDMTTs

Transmission

All of those records must not only be organized and stored but mapped to the schema, converted to XML, and transmitted to tax administrations. As with CbCR, the expectation is that most countries will follow closely with the OECD schema. However, as with CbCR, there will most likely be some variations in structure and format.

In its guidance, the OECD has stated it expects different tax administrations will exchange the GIR, once filed. However, as many of the public comments pointed out, it is not yet clear if an organization will need to transmit the GIR in multiple jurisdictions.

An Automated Solution is Non-Negotiable

The granularity and volume of data and the complexity of the GIR transmission require a powerful and complete tax technology solution to support them. To seamlessly produce and transmit the GIR, your system must automate how you:

• Organize and structure major volumes of data
• Compute complex Pillar Two calculations
• Organize calculation results into the GIR in a reviewable format
• Create the GIR XML
• Support ancillary filings around Pillar Two, including local QDMTT filings
• Seamlessly incorporate Pillar Two within other tax processes including:
  • CbCR
• • Income tax compliance
  • Income tax accounting

It is not enough for a technology solution to provide placeholders for data to produce the GIR. To be truly effective, technology should automate as much of the calculating and reporting as possible. Although Pillar Two is based upon financial book income, what it takes to get from source data to calculated results to reporting those results in the GIR and other reporting is incredibly complex. A solution that doesn’t prioritize automation is not a viable long-term solution.

CSC Corptax® GMT is a sustainable global Pillar Two compliance solution. It not only produces the GIR in a transmittable XML format but automates the process and provides a clean way to use consistent data across all income tax processes.

In short, Corptax GMT automates how your team:

• Uses APIs to retrieve source data without manual intervention
• Structures that data for Pillar Two
• Calculates adjustments to GloBE Income and Covered taxes
• Leverages provision to calculate Covered Taxes, including Deferred Tax amounts based on OECD guidance
• Leverages ownership information to automatically create entity inclusion percentages for GloBE Income and Covered Taxes
• Determines substance-based Income Exclusion amounts
• Calculates local country QDMTTs, the global Top-up Tax, IIR and UTPR percentages by amount/country
• Produces GIR reports and transmittable XML GIR

With the most consequential change in international taxation getting real very quickly, take a look at the most robust, complete, and automated Pillar Two accounting and compliance solution on the market. Click for a detailed Corptax GMT information sheet or contact info@corptax.com to chat with a Pillar Two expert.