El Sabr Gamel – Patience is beautiful

Originally published: June 2024

We are in a bit of an odd place on Pillar 2 (P2) right now. The rules are in effect in many countries, but the big push for taxpayers to focus on P2 has temporarily subsided a bit. If you wanted to fix P2 problems, you’re probably too late and you already have the problems now. Audits for pre-P2 years are mostly complete, but audits for years within the rules are still quite far off, so that means there’s less worry about accounting disclosures for now. Filing obligations are still very far away and other than in Belgium (https://lnkd.in/esxWGffV), registration requirements are too.

Most taxpayers now have a broad understanding of how the rules would apply to them, but no one has practical experience on how some of the nitty gritty details will work out. New guidance often triggers activity, as old positions are reassessed, but we haven’t had new guidance for a while now (there was a recent update to CbCR guidance, but it was minor https://lnkd.in/gjMJpb36). More guidance is expected over summer, but no one is quite sure when it will come or what it would cover. So, taxpayers and tax advisers use this time to slowly get more acquainted with the rules. But they all know more guidance is coming and that eventually, year ends, new transactions and more detailed looks will likely unearth whole new sets of P2 problems.

This is not the first time P2 activity had a slowdown. In late 2022, P2’s fate was uncertain as EU implementation efforts were in an impasse. This quiet was difficult to process after the flurry of activity in the twelve months before and I linked that to an Egyptian pop song about impatience (Sabry Aalil – صبري قلیل https://lnkd.in/gp_FyW6u). The current quiet period does not come with the same level of frustration. We know where we are headed. Though taxpayers still have much confusion and frustration, we know that these will be cleared up with time. More guidance and more practical experience means that things will fall into place. And there’s an Arabic pop song for that too (this time from Kuwait). Maha Ftouni goes through much pain and frustration in her personal relationship, but in the end she concludes “Patience is beautiful and one day you will see its rewards” (الصبر جميل واهو بكرة تشوف ويجيلك يوم https://lnkd.in/ggUQZGmC).

Obvious disclaimer: this is not advice. These views are my own and do not necessarily represent my employer.

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