The first filing cycle for the Pillar Two Global Anti-Base Erosion Information Return (GIR) completed in June 2025, covering the 2024 accounting year. Major systemic failures were avoided, but only through a series of pragmatic fixes and late-stage coordination between the OECD, national tax authorities and multinational groups. The 2027 cycle, which will draw in 19 additional "second wave" jurisdictions alongside the original 37, promises greater complexity. Practitioners and in-house teams should begin their preparations now.
XML schema and business rules
The GIR framework is built around an OECD-designed XML schema and an accompanying digital rulebook of more than 120 business rules. These rules are intended to verify that data entered into the GIR conforms to the Pillar Two model rules before tax authorities exchange information with one another.
In practice, the schema contained errors and conflicting business rules. Some returns that were substantively correct still failed validation. Different tax authorities implemented the same rules in different ways, producing inconsistent validation outcomes across jurisdictions. Temporary hot fixes, including the disapplication of specific validation steps, were needed to allow timely or corrected filings after rules had been amended or deactivated post-deadline.
To reduce similar friction in 2027, the OECD should consolidate and stabilise the digital rulebook before jurisdictions begin local implementation. Technical and XML guidance should be aligned early. Public consultation with taxpayers and advisers should accompany any revisions, and the OECD should publish worked examples of common scenarios to support consistent interpretation.
Late portal launches and validation failures
Tax authority filing portals frequently went live only weeks, or in some cases days, before filing deadlines. This left virtually no time for meaningful end-to-end testing. In certain jurisdictions, only around 20% of GIRs passed initial validation before the deadline. The remainder required further engagement with tax authorities to resolve errors whose cause was not always transparent to either side.
Where portals opened earlier, taxpayers and authorities had sufficient time to identify and fix technical problems before the deadline. Earlier portal availability, combined with structured testing windows and clear communication channels, should be treated as a baseline expectation for the 2027 cycle rather than a best-case scenario.
Central filing and the exchange network gap
Pillar Two's compliance burden is meant to be contained by a central GIR filing model: a multinational files once in a designated jurisdiction and that return is automatically exchanged with other relevant countries. The mechanism rests on a GIR multilateral competent authority agreement.
By April 2025, with roughly two months until the filing deadline, a significant problem had emerged. Although most participating countries had signed the agreement, only a limited number of bilateral exchange relationships had been activated pending notifications or ratifications. Multinationals faced genuine uncertainty about whether they would need to file locally in multiple jurisdictions or switch their central filing jurisdiction to one with a more complete exchange network.
The OECD and national authorities responded by issuing a political, though not legally binding, common understanding that local GIR filing requirements would not be enforced and penalties would not be imposed where exchange relationships remained unactivated. Most groups were consequently able to rely on the central model.
Difficulties remained. It was initially unclear which jurisdictions would adopt the common understanding treatment, and confirmation from national authorities arrived piecemeal. Where several countries also extended their filing deadlines, a further unresolved question arose: whether a tax authority that had deferred its own deadline might later challenge the validity of a centrally filed GIR. That question has not been definitively answered.
What the 2027 cycle requires
The validity of central filings in 2027 depends materially on how quickly the exchange network is built out for second wave jurisdictions. At present, only six of the 19 second wave jurisdictions have signed the GIR multilateral competent authority agreement, and few exchange relationships have been activated. It cannot be assumed that a further common understanding will be available if activation again falls short by the 2027 deadline.
Three further pressures will bear on the 2027 cycle. First, undertaxed profits rules take effect from the 2025 accounting year and represent a particular risk for groups whose ultimate parent is located in a jurisdiction that has not adopted Pillar Two. Second, data sourcing and compliance workloads will expand as more jurisdictions enter scope. Third, local variations in how jurisdictions have implemented the Pillar Two rules will affect how GIRs are prepared and what local differences must be identified and reported.
The OECD Forum on Tax Administration's Amsterdam Dialogue, convened to promote alignment and consistency in the rules' application between business and authorities, offers a potential forum for resolving some of these issues. Further OECD guidance is understood to be in development, though whether it will simplify or add to compliance obligations remains to be seen.
Groups that invest now in a structured action plan, covering data architecture, systems readiness, governance arrangements and local-jurisdiction coordination, will be substantially better placed when the 2027 deadline arrives.