The OECD work on Pillar One remains stalled, though parties are exploring a fresh start through a constructive dialogue, with the United States urging a return to discussion of first principles. A key objective appears to be slowing or containing new digital services taxes (DSTs) rather than delivering a multilateral reallocation regime.
The United Nations (UN) Framework Convention on International Tax Cooperation offers an alternative forum, with results expected in late 2027. The UN goal is explicitly political as well as technical: to provide a more inclusive forum for tax rulemaking and to strengthen the voice of developing countries in defining how cross‑border income should be taxed.
Two features distinguish the UN process from the OECD. First, decision-making at the UN does not require consensus, rather substantive matters can be decided by majority vote, including a two-thirds majority for protocols. This significantly lowers the barrier to adopting outcomes that lack support from all major economies. Second, the UN negotiations draw heavily on an existing ecosystem of UN technical work that emphasizes source‑based taxation.
While maintaining a lower profile, the UN Committee of Experts on International Cooperation in Tax Matters is quietly expanding and systematizing its technical work across a wide tax agenda. The non‑binding outputs may increasingly shape treaty practice and feed into the UN Framework Convention process, even as formal political authority remains limited.
Businesses now have to keep track of multiple negotiations happening at once – sometimes overlapping, sometimes moving in different directions and at times even seeming to compete with each other. The real challenge isn’t any single set of rules, but managing a mix of requirements, timelines and expectations that don’t always line up.
AI as a transformative force
The OECD and UN are aligned on one key point: artificial intelligence (AI) is a transformative force in tax administration, with growing convergence in how it is being applied. Common use cases include fraud and evasion detection, risk assessment, compliance monitoring, taxpayer services and improving administrative efficiency. As these capabilities take hold across tax authorities, they are also raising the bar for how businesses manage complexity and respond in an increasingly connected world.
“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. By embedding AI across the tax function, in compliance, analytics and governance, teams can move from reacting to policy change to anticipating it and acting with confidence,” says Martin Fiore, EY Americas Vice Chair – Tax.
Tax and trade travel together
Where tax, trade, and industrial policy collide — every decision carries ripple effects. An important feature of today’s environment is that tax policy is increasingly negotiated alongside trade policy and is a key component of industrial policy. Tariffs, supply‑chain pressures, national security concerns, tax-incentivized investment and fiscal needs are converging in policy design.
In practice, this means tax measures can trigger trade responses and trade negotiations can drive tax outcomes. Governments are using the full policy toolkit at their disposal. For companies, this convergence raises the stakes. Tax decisions can influence market access. Trade actions can reshape effective tax costs. Disputes in one area can spill quickly into another. The result is a less predictable policy environment where changes in one area can quickly affect others.
“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. This is really difficult unless you have a multifaceted approach where you have insights and inputs that are coming from all the different perspectives to align on what is best for that organization as a whole,” says Lynlee Brown, Partner, Global Trade, Ernst & Young LLP.
Unilateral and mini-lateral action fill the gaps
Where coordination lags, unilateral action accelerates. Many jurisdictions are moving forward with domestic measures to raise revenue, protect tax bases or respond to political pressure, even when those measures create friction with trading partners.
New alliances are also being forged, such as the Australia-Canada-India Technology and Innovation trilateral partnership. The pact aims to strengthen cooperation on critical minerals, emerging technologies and supply-chain resilience among the three nations. A trilateral memorandum of understanding was signed in March 2026, cementing the alliance’s framework and intentions.
The growing partnership between these countries highlights how governments can work together to strengthen economic ties and advance shared priorities. “By deepening collaboration on technology and innovation, the group has the potential to better align incentives and standards across three economies, shaping how they approach tax cooperation over time. It also offers a model of trust-based collaboration, showing how countries outside traditional power blocs can come together on economic and tax policy in a way that balances growth and fairness in an increasingly fragmented global landscape,” says Sameer Gupta, EY India Leader, Tax.
What this means for business
Fragmented cooperation requires a shift in mindset.
First, policy risk can no longer be assessed in silos. Tax, trade, legal, finance and supply chain teams need a shared view of how policy developments interact. Decisions made for tariff mitigation or supply chain resilience may carry tax consequences, and vice versa.
Second, scenario planning matters more than prediction. In a fragmented environment, there is rarely a single “right answer.” Businesses should prepare for multiple plausible outcomes, particularly where negotiations remain unresolved or politically sensitive.
Third, broad engagement remains valuable, but targeted engagement is key. Instead of focusing solely on processes at large multilateral venues or forums, companies should engage where outcomes are being shaped: bilateral discussions, regional initiatives and implementation guidance.
Finally, speed matters. Policy shifts can occur quickly, sometimes outside traditional legislative cycles. Investing in real‑time monitoring, strong data foundations and agile governance can make the difference between reacting late and adapting early.
Looking ahead
Global tax cooperation is evolving. The next phase will not be defined by a single agreement but by a mosaic of deals, workarounds and negotiated trade-offs. To succeed in this new environment, businesses need to invest in integrated decision‑making, real‑time insight and operational agility.
