Global tax policy is becoming more fragmented as companies navigate overlapping forums, uneven implementation timelines and growing links between tax, trade and industrial policy.

A More Fragmented Policy Environment

“Companies today are operating in a world marked by changing relationships and evolving alliances, where cooperation often takes a backseat to competitiveness,” said Aruna Kalyanam, EY Global and EY Americas Tax Policy Leader.

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EY’s 2026 Tax Policy and Controversy Outlook examines how these shifts could affect corporate tax strategy, compliance and dispute risk. The OECD Inclusive Framework remains central to international tax work, but its current focus is increasingly on administration and implementation, particularly Pillar Two and the global minimum tax rules.

Progress on Pillar One remains stalled, although countries continue to explore whether negotiations can resume. The US has called for a return to first principles, while EY said efforts may increasingly focus on limiting digital services taxes rather than creating a multilateral system for reallocating taxing rights.

UN Develops A Separate Tax Track

The United Nations is developing a Framework Convention on International Tax Cooperation, with results expected in late 2027. The process aims to broaden participation in global tax rulemaking and strengthen developing countries’ role in decisions on cross-border taxation.

Unlike the OECD process, UN decision-making does not require consensus, allowing substantive issues to be settled by majority vote, including a two-thirds threshold for protocols. The negotiations also place greater emphasis on source-based taxation.

Although the UN Committee of Experts on International Cooperation in Tax Matters produces non-binding guidance, EY said its work could increasingly influence treaty practice and the Framework Convention.

Businesses Face A More Complex Burden

Multiple tax negotiations can now proceed simultaneously, creating requirements and timelines that do not always align. EY said companies therefore need to manage policy developments across several forums rather than focus on individual tax rules.

AI is adding another dimension to tax administration, with authorities using it for fraud detection, risk assessment, compliance monitoring and taxpayer services.

“In a fragmented global policy environment, tax leaders need more than technical insight – they need intelligent systems that can connect data, model outcomes and respond at speed,” said Martin Fiore, EY Americas Vice Chair – Tax.

Tax, Trade And Industrial Policy Converge

Tax, trade and industrial policy are increasingly connected, EY said, as tariffs, supply-chain pressures, national security concerns, investment incentives and revenue needs influence decisions together.

“Tariff pressure, supply chain shifts, global tax negotiations and increasing enforcement are so closely linked and require companies to very quickly navigate risk, capture opportunities and make strategic decisions on where to operate,” said Lynlee Brown, Partner, Global Trade, Ernst & Young LLP.

Unilateral Measures Gain Ground

As multilateral negotiations move slowly, governments are increasingly turning to unilateral measures to raise revenue or protect their tax bases.

EY also highlighted smaller alliances such as the Australia-Canada-India Technology and Innovation trilateral partnership, which focuses on critical minerals, emerging technologies and supply-chain resilience. A memorandum of understanding establishing the partnership was signed in March 2026.

What Companies Need To Do

EY said businesses should integrate tax, trade, legal, finance and supply-chain teams when assessing policy risks. Scenario planning can be more useful than predicting a single outcome while negotiations remain unresolved.

Real-time monitoring, reliable data systems and agile governance can help companies respond before policy changes affect operations.

A Patchwork Future For Global Tax Rules

EY expects global tax cooperation to evolve through a mix of agreements, workarounds and negotiated trade-offs rather than a single comprehensive framework. Companies will need to integrate tax, trade and broader business decisions while monitoring developments across different forums.

The result is likely to be a global tax system where cooperation continues, but increasingly through regional arrangements and national initiatives rather than one unified process.