Fiscal Geometry: Institutional Distortion in OECD Pillar Two Across an X–Y Fiscal Plane

Abstract

This paper examines institutional distortion arising from the implementation of OECD Pillar Two within a coordinate-based fiscal representation defined by an X–Y fiscal plane. It treats international tax not as a coherent doctrinal system but as a rule-dense administrative environment in which domestic law, accounting standards, and supranational coordination mechanisms intersect without full structural alignment. Rather than attempting to reconcile these layers through interpretive harmonization, the study models their interaction as observable fiscal movement and constraint across two dimensions: cross-border fiscal reclassification (X-axis) and intergenerational post-tax capacity (Y-axis).

Within this representation, Pillar Two operates as a rule-set that introduces additional calculation interfaces—such as GloBE income adjustments, effective tax rate thresholds, and top-up tax mechanisms—each of which alters the continuity of fiscal flows and their admissibility across jurisdictions. The paper shows that distortion emerges not from isolated policy failure, but from the cumulative interaction of partially aligned systems, including domestic tax statutes, financial reporting frameworks (e.g., IFRS), and administrative enforcement processes. These interactions generate measurable discontinuities in both horizontal movement and vertical capacity.

By situating Pillar Two within a structural framework defined by F = X × Y under a going-concern constraint, the paper provides a method for observing when fiscal flows remain operational across jurisdictions and when they become fragmented or non-operative. The contribution is methodological: it offers a non-semantic, coordinate-based approach for recording institutional tension and distortion without requiring conceptual unification across legal and accounting domains.