On September 25, some of the world’s top tax professionals gathered for a day of thought leadership and discussion on the evolving complexities of international tax law. The one-day summit, FUSION 2025, featured panelists from three different continents and seven countries — covering topics such as Pillar 2 updates, the impact of global trade wars, and trends among auditors in various regions of the world.
Below, we’re sharing some insights from a panel discussion focused on Pillar 2, the OECD-led plan to establish a global minimum tax rate on multinational corporations. The panelists for this session were Ross McKinney, Managing Director of the International Tax Practice at GTM; Rik Smet, Counsel at Tiberghien (Belgium); Jens Krechel, a Tax Partner at WTS Global (Germany); and Benedict Teow, an Associate at Taxise Asia (Singapore).
Overview
Pillar 2 has been a slow-moving project over the past few years. In 2021, more than 130 countries signed onto an initial agreement, including the United States and the G7 nations, which put forth a simple pledge: All multinational corporations with annual revenues of €750 million or more must pay a 15% tax, at a minimum, in each of the countries in which they operate.
However, in practice, the vastly different tax regimes in participating countries have made Pillar 2 more complicated. The global project has necessitated considerable effort in reconciling domestic and international tax laws.
This prolonged effort was further disrupted over the summer. First, the G7 issued significant clarifications on Pillar 2, responding to the Trump administration’s efforts to reduce taxes on U.S. multinationals. Second, the U.S. Congress passed the One Big Beautiful Bill Act, overhauling the country’s tax code.
This panel focused on the various ways that different countries are navigating the rapidly changing landscape of international tax law.
Belgium
Smets spoke about the resistance to Pillar 2 laws in Belgium, along with solutions the country is working on to comply with global minimum tax standards.
- Challenges: When the European Union adopted the OECD’s Pillar Two rules, experts speculated that a lawsuit might challenge the directive in court. In July 2025, the Belgian Constitutional Court allowed a lawsuit challenging the validity of these rules to proceed. If it succeeds, the suit could strike a significant blow to Pillar 2 not only in Belgium but across the continent.
- Solutions: Smet also spoke about some of the Pillar 2 problem-solving underway in Belgium. Currently, Belgian tax law offers significant income-tax deductions to the biopharma sector. Many companies in the sector are eligible for up to an 85% deduction related to patents and innovation, which results in an effective tax rate of just 3.75%. Since that’s too far below the Pillar 2 standard, the Belgian government now allows companies to voluntarily reduce the deduction in their tax returns to ensure they meet the 15% threshold. Many firms are expected to adjust their taxes accordingly in their next filing.
Singapore
Teow discussed a range of legislative efforts in Singapore aimed at aligning with Pillar 2 compliance. This is taking place despite the country’s reputation for being a tax-friendly hub for multinationals.
- Qualified Domestic Minimum Top-up Tax (QDMTT): Teow spoke about the country’s willingness to implement a QDMTT, which is a tool designed to raise the effective tax rate on multinational companies and ensure they pay the agreed-upon 15% minimum. Out of the multinational corporations that treat Singapore as a regional headquarters, an estimated 80% will be negatively affected by the application of QDMTT.
- Income Inclusion Rule (IIR): The government recently passed the Multinational Enterprise Act, which introduced both the QDMTT and the IIR, another one of the key mechanisms outlined in Pillar 2. Both of these tools suggest Singapore’s willingness to align closely with the OECD model.
- Undertaxed Profits Rule (UTPR): This third mechanism is still under consideration in Singapore, though it has yet to be accepted there. The UTPR essentially functions as a safety net for Pillar 2 compliance globally. If a multinational fails to pay the 15% in one country, this rule allows other countries to make up the difference, taxing them additionally within their own jurisdiction.
- Alternative Incentives: Singapore has historically attracted investments to the country through the offering of robust tax incentives, many of which now come into conflict with Pillar 2 rules. The country has since developed new incentives, such as a “refundable investment credit” — a form of qualified refundable tax credit designed to offset the rise in income taxes without violating global standards.
Amidst the uncertainty surrounding Pillar 2, Teow noted that Singapore’s tax authority has made it clear they will take a pragmatic approach over a punitive one in the near future. The government has signaled that, as long as companies show that they have taken reasonable efforts to comply with the new rules, they will show discretion with enforcement.
Germany
In Germany, efforts to reform the domestic tax code are now bumping up against the need to comply with Pillar 2. Krechel noted that Germany is in the process of gradually lowering its corporate tax rate, which is set to drop from 15% to 10% by 2032. This move could indirectly require multinational corporations in Germany to take additional measures to become compliant with Pillar 2. The rate cut also affects companies with large deferred tax liabilities (DTLs), as the revaluation of these DTLs can push some companies outside of the scope of the CbCR Safe Harbor rules.
Germany has also proposed amendments to its Pillar Two legislation — an unusual move, given that the changes will take effect before the first returns are filed. Key proposed changes include:
- Correction of timing issues: Tax refunds from prior years (e.g., from winning a court case) would no longer distort the effective tax rate in the refund year, eliminating certain Pillar 2 issues that could potentially arise.
- Clarification: Traditionally, German law required companies to calculate CbCR Safe Harbor using financial statements rather than reporting packages. Going forward, either method would be allowed.
- QDMTT adjustment: Rumors exist that some nations, including Luxembourg and the UK, are seeking exemptions for securitization vehicles under the Pillar 2 rules. Germany is similarly considering an exemption from securitization vehicles from the QDMTT.
From an administrative standpoint, Germany has been at the forefront of addressing some of the more technical issues surrounding Pillar 2 compliance — delving into the details more thoroughly than most countries at this stage. Therefore, these German policies could become a template for other countries to replicate in the months and years ahead.
Key Takeaways
The uncertainty surrounding Pillar 2 has left international tax professionals working for multinational companies, as well as those within the government, in a state of limbo. As McKinney noted during the panel, the best-case scenario is that a resolution will be reached over the next few months, one clarifying the co-existence of U.S. tax code changes and Pillar 2 updates.
On the other hand, there’s the worst-case scenario: “It might all crash and burn,” McKinney said.
How GTM Can Help
There are many moving parts in this new international tax and trade landscape. The need for contingency planning and modeling is at an all-time high for multinational corporations, along with protecting the interests of their U.S. shareholders.
At GTM, we offer a range of tax solutions and industry-leading expertise. Our team is available to walk clients through policy shifts, technology and automation solutions, and tax filings on your behalf or through a collaborative structure.
Learn more about the tax solutions we’ve brought to clients here. Reach out to GTM today to discuss how to prepare effectively for your tax future.
