Rising complexity and compliance burdens pose the biggest tax policy challenge for global businesses, according to a Deloitte survey of 1,010 tax and finance leaders across 28 jurisdictions. Organizations are facing increased tax complexity, growing compliance burdens, and high upfront costs to capture the benefits of digitalization, the report found.
Tax complexity is top challenge for global businesses
For the third year in a row, tax transparency and reporting ranked as the top theme impacting businesses, with 38% of respondents naming increased compliance, administrative, and reporting requirements as the primary driver of operational impact. The complexity stems from multiple sources, including the Pillar Two global minimum tax rules from the Organization for Economic Cooperation and Development (OECD) and the European Union Carbon Border Adjustment Mechanism.
Part of the pressure reflects the one-directional nature of tax policy, Amanda Tickel, Deloitte global tax and trade policy leader, told Checkpoint. “It’s very rare that countries or governments remove taxes, they just tend to add more in,” she said. Multiplied across dozens of jurisdictions, that layering creates a sense of an ever-changing landscape.
With Pillar Two in its implementation phase, 88% of respondents expect to pay more tax as a result, though 56% anticipate only a marginal increase. Implementation is advancing unevenly, Tickel said. Major markets are proceeding, led by the European Union, while many jurisdictions, including India, China, and a number of Latin American and African countries, are not yet implementing any form of Pillar Two.
Businesses welcome simplification moves such as the additional safe harbors in the Side-by-Side package but feel they are not arriving fast enough. “Complexity is accumulating faster than simplification efforts,” Tickel said. That tracks the survey, in which 41% identified further Pillar Two simplification as a top priority for international coordination. The first filing deadline arrives at the end of June, and Tickel described “a flurry of activity” as businesses are confirming their systems can file.
Mixed news on the digitalization of tax
A majority of respondents, 85%, expect artificial intelligence (AI)-based tax compliance software to deliver positive impacts, from improved accuracy to reduced costs.
Asked about Tax Administration 3.0, the OECD concept where “tax just happens,” 80% of respondents expected a positive outcome, while 19% foresaw increased costs and complexity. “The reality is a lot has to happen before tax ‘just happens,'” Tickel said.
Optimism around e-invoicing has cooled, with the share of respondents expecting it to deliver simplified compliance falling from 59% in 2024 to 36% in 2026. Tickel attributed the shift to cost and complexity. Because there is “no framework, there’s no single e-invoice” and “no consistency” across the technical connections involved, she said, multinationals end up building them “multiple times.”
When asked to rank their concerns about expanding e-invoicing, respondents focused on data security. The top concerns were mitigating risks of unauthorized access or data breaches (61%), secure storage, retention, and management of e-invoice data (58%), and the adequacy of data processing agreements and controls with third-party providers (57%).
Tax incentives emerge as key tool for competition
As Pillar Two establishes a global minimum tax, governments are turning to tax incentives to compete for investment and talent. The survey reported that 57% of respondents see governments increasing the use or value of incentives to attract foreign talent.
Tax incentives have “always been really important” and are “quite a powerful lever for governments,” Tickel said. With minimum taxation taking hold, competition is “taking a slightly different form” rather than centering on headline rates. She framed the shift as part of industrial policy becoming more prevalent, with tax incentives or subsidies serving as “an important partner.”
Stability has become a key factor. When evaluating an investment jurisdiction, 60% of respondents rated tax stability and certainty as the most important, ahead of the 52% who cited the overall tax burden. Tickel pointed to a recent announcement from India offering a tax holiday running to 2047 for companies that own and build AI infrastructure there, as an example of how governments aim to reassure long-term investors.
Respondents also viewed the new substance-based tax incentive safe harbor in the Pillar Two Side-by-Side package as a positive development, with 38% expecting new incentives to emerge and 57% expecting existing ones to remain valuable.
In the United States, changes to clean energy tax credits under the One Big Beautiful Bill Act, P.L. 119-21, and related IRS and Treasury guidance prompted a range of responses: 65% increased investment in favored sources such as nuclear and biofuels, and 63% accelerated current clean energy projects. Global take-up of sustainability incentives remains limited, with 34% already making full use of those available.
Pillar One remains in limbo for now
Asked for an update on Pillar One, Tickel said the reallocation of taxing rights known as Amount A has not won agreement, with the United States indicating it will not sign up to the provisions. That, she said, provides more certainty that Amount A “is not progressing.”
Attention is moving elsewhere, Tickel said, pointing less to OECD progress and more to a framework the United Nations is expected to publish this summer on taxing digital services, which countries could choose to adopt. Meanwhile, digital services taxes and other digital levies persist, and Tickel said the challenge of taxing modern services is likely to be “exacerbated in the age of AI.”
Whatever form the next wave of reform takes, Tickel framed the tension between policy goals and the burden of meeting them as the survey’s overarching message. Across the themes, she said in the report, the “central challenge going forward” is “to check the balance between policy benefits and the costs and burdens of compliance.”
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