A new era for international tax?

Governments are under pressure to attract investment, strengthen competitiveness and protect revenues. At the same time, businesses are demanding simpler rules and greater certainty. 

So, is the era of international tax co-operation coming to an end? 

Not quite. 

The rules are changing – but the global tax architecture built over the past two decades remains firmly in place.  

The Organisation for Economic Co-operation and Development (OECD)’s) Pillar Two rules have moved from policy ambition to operational reality across multiple jurisdictions, making international tax reform an increasingly practical consideration for how businesses operate, invest and manage compliance. 

The real story is what comes next. 

The centre of gravity is shifting – from creating new rules to making existing ones work; from harmonisation to competitiveness; and from broad reform to a sharper focus on certainty, investment and growth. 

For business leaders, the question is no longer whether international tax is changing, but what those changes mean for the decisions they make next. 

At a recent international tax event hosted by Baker Tilly network member MHA, three themes emerged, each with significant implications for mid-market businesses. 

Political debate may continue, but businesses should not plan on Pillar Two disappearing. The conversation has moved decisively from whether it will happen to how organisations will manage it. 

For multinational groups, the priority is now execution: getting the data right, strengthening governance, meeting reporting obligations and embedding compliance into existing systems and processes. The competitive advantage will increasingly lie not in understanding the rules, but in making them work efficiently at scale. 

When more than one in three organisations are delaying or cancelling major investments because of policy volatility, tax is no longer just a compliance issue. It is a growth issue. 

Our global report, The mid-market maze, found that 35% of organisations have delayed or cancelled major investments in response to rapid policy changes, with the impact particularly acute in parts of Europe.  

The result is a growing bias towards short-term decision-making, as businesses hesitate to commit capital when the regulatory and political goalposts keep moving. 

Tax sits at the heart of this debate.  

Governments are under pressure to raise revenues and maintain transparency, but also to attract investment, support innovation and strengthen competitiveness. That tension is likely to drive the next phase of tax policy, with greater emphasis on simplification, certainty and reducing the cumulative compliance burden. 

The future of international tax is far from settled.  

Pillar One faces significant uncertainty, while questions around taxing multinational profits, the rise of artificial intelligence-driven business models and the role of the UN in setting global tax standards are likely to shape the debate for years to come. 

For businesses operating internationally, the challenge is not simply keeping pace with regulatory change. It is understanding how these developments create both risks and opportunities.  

Those organisations that invest now in governance, compliance and strategic planning will be best placed to navigate what comes next.