Cross-border Tax Talks Pillar Two in Asia-Pac: Still happening
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Jul 8, 2025 In this engaging discussion, Jesse Kavanaugh, an international tax partner at PwC Hong Kong and expert in Pillar Two regulations, shares his valuable insights. He highlights the uneven implementation of Pillar Two across various Asia-Pacific jurisdictions and addresses the pending legislation in Hong Kong. Jesse explores the complexities of compliance management, particularly the pitfalls in transitional safe harbors and the unique challenges faced by industries like shipping and real estate. His crucial advice? Start preparing for compliance now!
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Distinct Pillar 2 Data vs. Calculation Needs
- Pillar 2 requires distinct data and calculation strategies; integrated ERP tools often lack the complex tax calculation expertise needed.
- Taxpayers need separate solutions for data gathering and compliance calculations to meet regulations efficiently.
Diverse Data Strategies in Asia-Pacific
- Asia-Pacific taxpayers use three main data strategies for Pillar 2: ERP systems, bolt-on tools, or manual spreadsheets.
- Many groups delay automation due to resource limits or uncertainty, complicating future compliance.
Safe Harbor Challenges in Asia-Pacific
- Many Asia-Pacific groups fail transitional safe harbors in at least one jurisdiction, making early system building necessary.
- Taxpayers must prepare for exceptions especially in territorial regimes like Hong Kong that complicate meeting safe harbors.
