Global Tax Controversy and Dispute Resolution Survey

The report highlights a significant rise in tax inquiries driven by advanced data analytics and automation tools used by tax authorities, the challenges businesses encounter in managing these inquiries, and the potential impact of the new Global Minimum Tax rules (Pillar Two) on tax functions. The findings emphasize the need for businesses to be well-prepared, leverage new technologies, and engage proactively with tax authorities to navigate the increasingly complex tax environment. Key findings include: 

• Increasing Tax Inquiries: Tax inquiries have risen significantly over the past three to five years, with 71% of surveyed businesses experiencing an increase, with this trend expected to continue driven by the growing technological sophistication of tax authorities and increase regulatory pressure. 

• Technological Advancements: Advanced technologies, such as data analytics, automation tools, and the use of AI are enabling tax authorities to conduct more thorough and frequent inquiries.

• Regulatory Pressure: The increase in tax regulation at both national and international levels is contributing to the rise in tax inquiries.

• Dispute Frequency: 43% of tax inquiries evolve into disputes, with many businesses facing prolonged and resource-intensive issues to manage.

• Varied Inquiry Types: Inquiries cover a broad range of taxes, including corporate tax, transaction taxes, international taxes, employment taxes and indirect taxes.

• Extended Dispute Timelines: Tax disputes can take years to resolve, with many lasting three years or more. The complexity of issues and the involvement of multiple jurisdictions contribute to these extended timelines. 

• International Tax Complexity: Managing relationships with multiple tax authorities across different jurisdictions adds complexity and increases the likelihood of disputes.

• Pillar Two Concerns: The new Global Minimum Tax rules (Pillar Two) are expected to increase the burden on tax functions and generate more inquiries and disputes. Businesses are concerned about the interplay between these rules and existing tax regulations, which could lead to increased compliance burdens and potential conflicts.

• AI in Tax Management: Many businesses see AI as a potential tool to manage increasing tax inquiry and dispute workloads, though its adoption faces challenges.

For a deeper understanding of these insights and to explore strategies for managing tax inquiries and disputes, we encourage you to download the full report.