Tax Allocations

Last updated on 2025-07-21

Overview

The Tax Allocations workspace is used to allocate tax expenses of controlled foreign corporations (CFCs) and taxes on distributions from a source constituent entity (CE) to a target CE.

The transferred values affect the CE calculation in the data fields CT-1.4 and CT-1.5. The interface enables users to view both Outgoing allocations and Incoming allocations, providing flexibility in managing financial movements. It also supports exporting allocation data as an Excel or PDF file for reporting and analysis. Additionally, the Pillar 2 module includes filtering and search functionalities to manage and organize data efficiently.

This article contains the following sections:

Navigation

The Tax Allocations workspace can be found at Pillar 2 | Entity Data Collection | Tax Allocations. The workspace is displayed as follows, for example:

'Tax Allocations' workspace
'Tax Allocations' workspace
Creating New Allocations

In addition to importing allocations, you also have the option to manually create new allocations. To create a new tax allocation:

  1. Select a period from the Applies to period drop-down menu.
  2. Select the source CE from the Company drop-down menu.
  3. Click Create.
  4. Select the following:
    • Target CE.
    • Current Taxes (Other) as the adjustment type.
    • The legal basis for the adjustment:
      • Article 4.3.2 (c) - CFC Tax Expense
      • Article 4.3.2 (c) - CFC Tax Expense (Blended CFC Regime)
      • Article 4.3.2 (e) - Covered Taxes on distribution
  5. Enter the amount of CFC tax expense to be allocated to the selected subsidiary in the local currency of the source CE.
  6. Click Save.
Editing Existing Allocations

To edit an existing tax allocation:

  1. Select a period from the Applies to period drop-down menu.
  2. Select the source CE from the Company drop-down menu.
  3. Click the edit button (the pencil icon) next to the allocation.
  4. Select the following: 
    • Current Taxes (Other) as the adjustment type.
    • The legal basis for the adjustment:
      • Article 4.3.2 (c) - CFC Tax Expense
      • Article 4.3.2 (c) - CFC Tax Expense (Blended CFC Regime)
      • Article 4.3.2 (e) - Covered Taxes on distribution
  5. Enter the amount of CFC tax expense to be allocated to the selected subsidiary in the local currency of the source CE.
  6. Click Save.

Notes:

  • Optionally, you can upload supporting documents as attachments to the allocation or add a description, e.g. a comment that explains divergences from prior years.
  • Allocations use the local currency of the source CE.
  • The Incoming allocations tab is for informational purposes only. Entering new allocations or editing existing allocations must be done in the source CE.

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