Global Tax Controversy & Dispute Resolution: Key Findings and Survey Results

The findings of the report 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. Some of 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. Fewer than one in five businesses has seen a decrease in the volume of inquiries received or expect to see a decrease soon. Inquiries cover a broad range of taxes, including corporate tax, transaction taxes, international taxes, employment taxes and indirect taxes. In Ukraine for the year 2025, the State Tax Service has scheduled 4,700 business audits. In 2024, over 13,000 scheduled and unscheduled audits were conducted. According to the Tax Audit Department, these audits resulted in additional charges surpassing 38 billion UAH, almost three times more than the amount in 2019 (during 2020-2023 most types of the tax audits were under moratorium).

AI in Tax Management

Advanced technologies, such as data analytics, automation tools, and the use of AI are enabling tax authorities to conduct more thorough and frequent inquiries. Meanwhile, 44% of businesses want AI to play a big role in improving the speed and quality of their tax dispute work. However, its adoption faces challenges:

• Resource Competition: Limited resources within companies restrict AI capacity.
• Data Quality: AI effectiveness hinges on high-quality data, which is often lacking.
• Regulation: The EU's AI Act imposes stringent regulations, including on large language models, with non-compliance possibly resulting in fines up to €35 million or 7% of annual turnover. Ukrainian companies developing AI for the EU must evaluate the system's risk category, assess its impact on security and rights, and ensure compliance with European laws.

Regulatory Pressure and Pillar Two Concerns:

Heightened tax regulations at national and international levels are driving more tax inquiries. The Global Minimum Tax rules (Pillar Two) are anticipated to add complexity, increase burdens on tax functions, and lead to more inquiries and disputes. In Ukraine, Pillar Two is defined as a priority in the National Revenue Strategy 2024-2030, approved by the government in 2023.

Dispute Frequency and Prolongation:

43% of tax inquiries evolve into disputes, often becoming prolonged and resource intensive. Many disputes last three years or more due to issue complexity and involvement across multiple jurisdictions. In Ukraine, lawsuits against the State Tax Service increased by nearly 20% in 2024 compared to 2023, with dispute values rising from 267 billion UAH to over 436 billion UAH. However, resolutions in favour of taxpayers increased by 1.7 times, indicating a trend toward more successful challenges to tax audits.

International Tax Complexity

Navigating relationships with multiple tax authorities across jurisdictions heightens complexity and dispute likelihood. Only 33% of businesses deal with a single, home-market tax authority. In contrast, over half (52%) engage with multiple authorities within the same country — such as federal and state bodies, or agencies overseeing various tax areas.

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.