Archives December 2024

Getting Ready for BEPS 2.0 Pillar Two Compliance


 

The OECD/G20 BEPS 2.0 Pillar Two initiative is rewriting the rules for global tax compliance. If your company earns more than €750 million in annual revenue, you’ll soon need to comply with the new 15% global minimum tax rate. It is a game-changer for businesses with a global footprint.

 

Countries like Japan, South Korea, Australia, and New Zealand have already introduced Pillar Two rules and others like Singapore and Hong Kong are catching up.

 

How will this impact your business? How can you adapt without disrupting your day-to-day operations? Read on!

 

What BEPS 2.0 Pillar Two Means for Your Business

 

Pillar Two ensures that large companies pay a fair share of taxes, regardless of location. For companies that fall within its scope, this means filing a detailed GloBE Information Return (GIR). This isn’t like the existing Country-by-Country Reporting (CbCR)—it’s much more demanding. With over 200 data points required, it’s no small task.

 

While the safe harbor rules offer a temporary reprieve, full compliance is on the horizon. The clock is ticking, and the time to act is now!

 

Safe Harbor Rules: A Helping Hand

 

The transitional safe harbor rules offer some breathing space. They let businesses use their existing CbCR processes to meet early compliance requirements.

 

One cannot, however, become complacent because this support is not permanent. Melvin Song, Head of Group Tax at CapitaLand Investment Limited, cautions: “Safe harbor rules buy time, but you’ll need that time to build the systems, processes, and strategies to handle the real challenges of Pillar Two compliance.”

 

Why Technology Is Your Best Ally

 

Let’s face it – trying to manage it all manually is just not viable. The sheer volume of data and complexity involved in this exercise, make automation a non-negotiable need rather than a needless luxury.

 

The key to simplifying Pillar Two compliance lies in building an integrated IT solution. Your systems for Finance, Accounting, and Tax Reporting need to work together seamlessly. It is not just a tax problem but a company-wide effort. Teams from Finance, IT, Legal, and even HR need to collaborate to make it happen.

 

A Simple Plan to Tackle BEPS 2.0 Compliance

 

Preparing for Pillar Two compliance might seem overwhelming. Let’s break down the process into clear steps to make it easier:

 

1. Discovery Phase:

Begin by figuring out where your data is, what’s missing, and who’s responsible for the lacuna. This involves engaging teams from across your organisation to ensure all bases are covered.

 

2. Design Phase:

Plan how your compliance system will operate. Can you adapt what you already have, or do you need anything new? Decide whether to tackle this in-house or seek outside assistance.

 

3. Implementation Phase:

Roll out your solution, test it, and train your team to use it. This process takes time, and most businesses take 6–9 months. So, don’t wait to get started!

 

Why XML Matters for Pillar Two and CbCR Compliance

 

XML plays a crucial role in simplifying compliance for both CbCR and Pillar Two filings. Its flexibility and ability to handle complicated data structures make it ideal for automating the reporting process. XML allows businesses to combine data from several systems, verify accuracy, and reduce manual errors. This streamlined technique is especially useful for managing Pillar Two’s complex data requirements.

 

Finding Opportunity in Compliance

 

Complying with BEPS 2.0 Pillar Two can be tough, but it is also a chance to enhance your company’s operations. The data gathered for compliance can serve multiple purposes, like

improving governance, supporting sustainability reporting, and aiding in strategic decision-making.

 

As tax compliance gets traction in the C-suite, your tax team gets the opportunity to demonstrate its value and play a more active role in driving your company’s strategy.

 

The Time to Act Is Now

 

Preparing for BEPS 2.0 Pillar Two isn’t just about ticking boxes—it’s about future-proofing your business. Using the right technology, creating a clear plan, and working closely with your teams can turn compliance into an opportunity to stay ahead.

 

Don’t wait for deadlines to loom. Start preparing now to handle these changes with confidence. Follow the DataTracks blog for the latest updates and insights to stay one step ahead.



Finance

GPSR explained – read on if you sell to NI and the EU. All you need to know about the General Product Safety Regulation


If you’re a UK-based business selling non-food products into Northern Ireland and/or the European Union, you’ll be subject to GPSR as of 13th December 2024. Failure to comply with these new rules could be costly. Read on to learn more about GPSR and what you need to do to stay on the right side of the law.

What is GPSR?

The General Product Safety Regulation (GPSR) is a legal framework for the European Union that ensures all consumer products sold are safe for use. The rules come into effect on 13th December 2024, and they apply to both new, used, and reconditioned products.

Since Brexit, Northern Ireland has an open trading agreement with the EU and products sold into or from NI are also subject to GPSR. This means that businesses based in England, Scotland and Wales and that sell non-food products into the EU and/or NI must comply with the new regulations.

How does GPSR work?

GPSR replaces the existing EU’s General Product Safety Directive 2001 and the Food Imitating Product Directive of 1987. Enforced by market surveillance authorities, the rules aim to protect consumers and ensure accountability by bringing regulations up-to-date in light of new technologies, e-commerce, and global supply chains. GPSR applies to non-food consumer products and requires manufacturers, distributors, and online marketplaces to identify and mitigate risks, provide clear safety information, and swiftly recall unsafe products. GPSR emphasises transparency, including the use of digital tools such as QR codes for product traceability.

What you should know:

  • Businesses selling into the EU and Northern Ireland must have an EU-based point of contact on product safety (known as the ‘EU Responsible Person’)
  • Products must be traceable (typically via a batch number or serial number) in a way that is visible and easily accessible for consumers
  • Businesses selling via an online platform must verify their compliance with GPSR requirements and ensure the rules are adhered to in their online listings

Are there exemptions from GPSR?

The following products and categories are excluded from GPSR:

  • Medicinal products
  • Food and feed products
  • Living animals and plants
  • Genetically modified organisms and microorganisms
  • Animal by-products
  • Plant protection products, also known as pesticides
  • Plant and animal products related to their reproduction
  • Antiques and some works of art
  • Certain types of aircraft
  • Travel equipment operated by a service provider to transport consumers
  • Products that need to be repaired, reconditioned, or recycled prior to being used and are clearly marked as such

Are services also affected by GPSR? 

As the name suggests, GPSR only affects physical products. Services are not subject to this regulation.

How do I comply? 

To comply with GPSR and to continue selling non-food products into NI or the EU, you must:

  1. Provide the product manufacturer’s name and contact information for every product you sell into NI and/or the EU
  2. If the manufacturer isn’t located in the EU or NI, you’ll need to indicate an EU-based Responsible Person or entity, along with their name and contact details. If your business does not have an EU-based office or distributor, you’ll need to hire an EU service agent to act on your behalf
  3. Product information, such as model number, pictures, type, and CE marking, must be clearly visible on every product
  4. Product safety and compliance information like safety warnings, labels, and product manuals in the local language must also be provided. You can include an image (a pictogram, a symbol, or a label), a statement (safety warnings or chemical hazard warnings), a product manual, or any other document that contains this information. The supported file formats are pdf, jpg and png

What is the penalty for non-compliance with GPSR?

Penalties for non-compliance with GPSR can be severe, ranging from significant fines to product recalls and legal action. The exact penalties depend on the severity of the violation and the risks posed to consumers. In extreme cases, businesses may face fines of up to 4% of their annual worldwide turnover.

What’s meant by a ‘Responsible Person’?

A ‘Responsible Person’ is someone who can answer questions, complaints and product safety concerns from consumers. The Responsible Person must be a human being and cannot be a chatbot, AI tool or similar.

The Responsible Person can be one of the following and must be located in the EU or NI:

  • The manufacturer
  • An importer, if the manufacturer is not established in the EU or Northern Ireland
  • An authorised representative of the manufacturer
  • A  fulfilment service provider if the manufacturer, importer, and authorised representative aren’t based in the EU or NI

How will GPSR impact my business?

GPSR will affect UK businesses by requiring enhanced product safety measures for goods sold into the EU. You’ll also need to designate a Responsible Person (RP) based in the EU to ensure compliance, which will add administration costs. You may also face additional expenses for updated safety assessments, traceability systems, and providing clearer labelling or digital tools like QR codes. For UK businesses that have limited sales into the EU or NI, the added costs of complying with GPSR may be more than their profits on such sales.

What should I do if I sell on eBay or Amazon? 

Online sellers should check with their platform provider for full details on GPSR compliance.

How does Swoop support international traders?

GPSR may place added burdens on your international business, but working with the best partners can help you overcome the challenges. Trust Swoop to introduce you to the best trade finance and other types of business funding, plus a range of insurance products to keep your business safe.



Finance