TEI Midyear: Corporations wrestle with potential tax policy shifts
TL/DR –
Tax policies are experiencing significant changes that have corporate tax departments feeling unsettled, particularly those within multinational corporations. Various Acts and international tax provisions are causing shifts in the landscape, leading to uncertainties in compliance and planning for businesses globally. The Thomson Reuters Institute’s 2024 State of the Corporate Tax Department report reveals that the second most significant challenge for tax departments is concern over tax regulations, with a desire to become more proactive in their approach, suggesting a possible greater reliance on technology in the future.
Adapting Corporate Tax Strategies Amid Political Shifts
The frequent shifts in tax policies due to political changes necessitate agility and strategic planning from corporate tax departments. These changes can significantly impact tax functions within domestic and international companies. Currently, tax professionals are especially unsettled due to the proposed regulatory changes in the tax industry.
Current Flux in Tax Landscape
The Tax Cut and Jobs Act
The reconciliation process, a legislative provision introduced in the Budget Act of 1974, influences tax and mandatory spending changes, impacting the strategic planning of corporate tax departments. Many provisions from 2018’s Tax Cut and Jobs Act are likely to be extended beyond 2025, some may face revisions or repeals.
Biden-Era Tax Changes and International Tax Provisions
The future of regulations established during the Biden administration and the international tax landscape remain uncertain. These include potential amendments to the Inflation Reduction Act, alteration to US research & development credits, and changes influenced by President Trump’s legacy rulings.
Tax Considerations for Digital Services
The evolution of international tax policy also includes the future of Pillar One, the proliferation of digital services taxes, and potential retaliatory measures. Understanding these dynamics is crucial for businesses operating globally to navigate international tax compliance and planning complexities.
Key Concerns for Corporate Tax Departments
According to the 2024 State of the Corporate Tax Department report, the second most significant challenge for tax departments is the concern over tax regulations and lack of clarity on new or amended tax policies.
Strategies for Managing Extreme Changes
More than 70% of respondents in the survey favored a proactive approach to mitigate the complexities of global taxes. The 2025 Corporate Tax Department Technology Report revealed that over 90% of respondents were optimistic about tax technology, and a significant portion anticipated an increase in their technology budgets.
Department leaders must stay informed about legislative priorities and potential changes in tax policy to align their tax strategies accordingly, using advanced technology tools to work more efficiently.
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