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The 2026 EY Global Tax Policy and Controversy Outlook
Global tax policies are evolving fast. This series shows what’s changing, what could be next and how businesses can prepare with confidence.
Learn about the key tax policy, enforcement and controversy developments and expectations in the 74 jurisdiction reports.
The 2026 outlook for global tax policy and controversy
The pace of global change is relentless, and decisions rarely occur in isolation. Around the world, leaders are navigating a complex web of competing priorities: stimulating growth while protecting public finances, balancing security needs against budget constraints, working with international partners without sacrificing national interests and embracing technological innovation amid rising risks. These pressures all surface in global tax negotiations, which increasingly mirror the interconnected and demanding realities of modern policymaking.
A Luxembourg perspective
What’s shaping tax policy and controversy in Luxembourg in 2026?
In 2026, Luxembourg’s tax landscape will be shaped mainly by ongoing Pillar Two implementation, new compliance obligations and the forthcoming reform of the carried interest regime. While no major tax reform is expected, authorities will continue to focus on transfer pricing, foreign permanent establishments and expense deductibility during audits. Companies are expected to prioritize data readiness.
Tax policy decisions will continue to center on strengthening Luxembourg’s competitiveness, attracting talent and supporting purchasing power. Recent (2025) and upcoming measures include renewed R&D and innovation aid schemes, a 1% reduction in the corporate income tax rate, and a subscription tax exemption for ETFs. Other notable developments include the implementation of OECD guidance on Pillar Two, the new standardized top-up tax information return (TTIR), automatic information exchange between authorities, and a new tax credit to support investment in startups.
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The three major drivers of tax policy
There are three major drivers that together are shaping tax policy and controversy in 2026. We’ll explore each and how business can prepare for potential changes.
1. Balancing tax competition and revenue needs
Governments face a delicate balancing act. On one hand, they must generate more revenue to fund security measures, sustain public programs and manage mounting debt. On the other, they strive to remain attractive destinations for investment and catalysts for economic growth. We’ll explore how governments are navigating these competing priorities amid political and economic volatility. We’ll also explain how businesses can capitalize on opportunities and reduce risks.
2. International tax cooperation
The year began with the Organisation for Economic Co-operation and Development (OECD) releasing long-awaited guidance including the side-by-side arrangement, effectively exempting US multinationals from most Base Erosion and Profit Shifting (BEPS) 2.0 Pillar Two global minimum tax rules, as well as simplified Global anti-Base Erosion (GloBE) and incentive rules. This release is the culmination of years of work and debate, but there is still work to be done as rules come into place. We’ll explore the status of Pillar Two as well as what is next in global negotiations.
3. Rising tax controversy
Despite ongoing efforts to harmonize global tax norms, compliance remains fragmented and continues to evolve at a rapid pace. The heightened level of tax risk and controversy will continue as sources of tax controversy diversify. The implementation of the Global Minimum Tax of Pillar Two, including the side-by-side arrangement, the future of digital taxes and changing transfer pricing policies are all poised to add to current workloads. Effective data management is critical to addressing this rising controversy. Both businesses and tax authorities are embracing technology, including generative AI (GenAI), in the hopes of alleviating burdens. We’ll explore what governments and tax authorities are doing and how businesses can prepare and manage the risks.
How EY can Help
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Our tax policy professionals can help you stay ahead of potential tax changes, better manage tax risk and understand key tax trends. Find out more.
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Our tax professionals can help act as a "bridge" with tax authorities should disagreements over your company's tax strategies arise. Find out more.
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Our indirect tax and global trade team can help your business strategically meet its tax obligations and resolve tax controversy. Find out more.
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