The landscape of international tax dispute resolution is undergoing significant transformation. With the continued expansion of cross-border business operations and increasing digitalization, tax authorities are intensifying scrutiny, and the likelihood of multi-jurisdictional tax disputes has increased considerably. In this environment, the risk of double taxation, i.e., the same income being taxed in more than one jurisdiction, has become more pronounced. Consequently, effective dispute resolution mechanisms are crucial strategic tools for multinationals in today’s global economy; they are central to ensuring tax certainty, managing financial risk, and enabling informed business decision-making.

This evolving dynamic is strongly echoed in the Organization for Economic Co-operation and Development (OECD) Secretary-General’s Tax Report to the G20 (April 2026)[1], which underscores that maintaining and enhancing tax certainty is fundamental to promoting investment, cross-border trade, and economic growth. The report highlights that, in a globalized and increasingly mobile economy, disputes over taxing rights are inevitable, making it essential to prioritize the simplification of tax rules, robust dispute prevention mechanisms, and efficient resolution processes such as the Mutual Agreement Procedure (MAP) and arbitration.

Traditional Framework: Mutual Agreement Procedure and Arbitration

Historically, the cornerstone of international dispute resolution has been the Mutual Agreement Procedure (MAP). MAP refers to a mechanism embedded in many bilateral tax treaties that allows the competent authorities of two jurisdictions to negotiate and resolve disputes, primarily to eliminate double taxation. It has long functioned as the primary tool for resolving cross-border tax controversies. However, as global transactions have increased in both scale and complexity, MAP cases have expanded significantly in volume, leading to delays and inefficiencies. Although improvements under the OECD Base Erosion and Profit Shifting (BEPS) Action 14 initiative have enhanced timelines and introduced peer review mechanisms, practical challenges remain. Resolution timelines continue to be lengthy, often extending over multiple years, thereby creating prolonged uncertainty for taxpayers. In this context, the OECD’s 2024 MAP statistics[2] (released on October 31, 2025) indicate that dispute resolution outcomes remain effective, with average timelines of 27.4 months (30.9 months for transfer pricing cases) and 76% of MAP cases reaching full resolution. However, the total number of closed MAP cases declined by 2.8% in 2024, following a peak in 2023, driven by a 5.5% decrease in closed transfer pricing cases.

A key limitation of MAP is its bilateral nature. While suitable for disputes involving two jurisdictions, it is less effective in scenarios involving multiple countries, which are increasingly common in modern business structures. Another structural concern is the absence of a guaranteed outcome when competent authorities fail to reach agreement. To address this, binding arbitration mechanisms have been introduced in certain treaties, particularly among developed economies. Arbitration provides a decisive resolution when negotiations fail; however, its adoption remains uneven, with several jurisdictions reluctant to accept mandatory arbitration due to concerns around sovereignty and administrative capacity.

At the EU level, this gap has been addressed more systematically through Council Directive (EU) 2017/1852[3], which establishes a structured dispute resolution framework with mandatory, binding arbitration and defined timelines. In practice, European Commission data[4] indicate that MAP cases still take approximately 29 months on average to conclude, with significantly longer timelines observed in some jurisdictions and a substantial number of cases extending beyond two years before progressing to arbitration, underscoring both the importance of arbitration as a backstop and the continued need for more efficient and coordinated dispute resolution mechanisms.

OECD Pillar One: A Shift to Multilateral Dispute Resolution

In response to these limitations, multilateral approaches are being explored under the OECD’s two-pillar solution. While the design of Pillar One is well developed, its implementation remains on hold and ultimately may not succeed. Nevertheless, Pillar One, which aims to reallocate taxing rights for certain multinational enterprises, proposes a fundamentally different dispute resolution model. This framework introduces a coordinated, multilateral process whereby a single filing is reviewed jointly by all relevant jurisdictions. Disputes are addressed through a structured mechanism involving initial review, panel-based advisory processes, and, if required, a final determination panel delivering a binding outcome.

This model represents a shift from fragmented, bilateral processes to a unified approach, potentially reducing duplication and improving consistency. It is particularly relevant in cases involving multiple jurisdictions where bilateral mechanisms are inadequate. While operational complexity remains, the framework is designed to ensure finality through binding outcomes.

OECD Pillar Two: Emerging Uncertainty in Dispute Resolution

By contrast, Pillar Two, which establishes a global minimum tax (GMT) framework, has yet to develop a dedicated dispute resolution mechanism. As jurisdictions implement Pillar Two through domestic legislation, the risk of divergent interpretations increases. This may give rise to disputes relating to the computation of effective tax rates, the application of top-up taxes, and the interaction with domestic laws.

In the absence of a bespoke multilateral process to be implemented via a Multilateral Convention, taxpayers are expected to rely on existing tools such as MAP, domestic litigation, or administrative coordination mechanisms. The absence of clarity in this area creates a degree of uncertainty, particularly given the multi-jurisdictional nature of the rules and the potential for inconsistent outcomes.

United Nations Framework: A More Inclusive but Flexible Approach

Parallel to OECD-driven developments, the United Nations (UN) is progressing discussions on a Framework Convention on International Tax Cooperation. This initiative seeks to establish a more inclusive system of global tax governance, particularly reflecting the interests and constraints of developing economies.

In terms of cross-border disputes, the UN framework is expected to include both preventive and resolution mechanisms, with a focus on optionality under both of these headings, to accommodate diverse legal systems, institutional capacities, and policy preferences. Available options will include some of the tools already used by many jurisdictions, such as Advanced Pricing Agreements, Advance Rulings, MAPs, and arbitration, with additional options, including mediation and conciliation, being introduced. Crucially, mandatory arbitration is not expected to be imposed.

The effective use of these mechanisms will depend on adequate administrative capacity, an issue particularly for developing nations. In light of this, the framework is expected to explicitly integrate robust capacity-building measures to help all countries implement and benefit from global tax standards. Current proposals include dedicated technical assistance, institutional support, training, and knowledge-sharing to strengthen tax administrations in under-resourced states. While the UN’s approach addresses sovereignty concerns and resource limitations, it may also result in varying levels of certainty across jurisdictions, particularly where binding mechanisms are not adopted.

Coexistence of Parallel Frameworks: Synergies and Challenges

The emergence of both OECD and UN-driven frameworks raises questions regarding their interaction and coexistence. On the one hand, the UN framework may complement the OECD system by addressing gaps in jurisdictions lacking robust treaty networks or administrative capacity. Its focus on dispute prevention and capacity building may help reduce disputes over time. On the other hand, the coexistence of parallel systems may increase complexity for taxpayers, who may need to navigate multiple procedures depending on the jurisdictions involved. This fragmentation could lead to inconsistent outcomes, increased compliance costs, and the potential for forum shopping. Further, differences in the enforceability of outcomes, particularly where non-binding mechanisms are used, may impact the overall effectiveness of dispute resolution.

Conclusion

The global tax dispute resolution framework is evolving from traditional bilateral mechanisms to a more complex architecture involving multilateral OECD processes and a parallel, more flexible UN-led approach. While these developments aim to address the limitations of existing systems, they also introduce increased complexity, potential fragmentation, and differing levels of certainty across jurisdictions.

For businesses, the key takeaway is that dispute resolution is no longer a purely technical tax function, it is a strategic business consideration directly linked to protecting value. In an environment of rising cross-border tax risks, organizations should adopt a proactive approach by embedding dispute prevention within their tax strategy through tools such as APAs, advance rulings, and early engagement with tax authorities. At the same time, a clear understanding of available resolution mechanisms, including the applicability of arbitration and emerging multilateral processes, is critical in managing disputes effectively.

The ability to anticipate issues, prevent disputes where possible, and resolve them efficiently when they arise will be central to managing financial risk and safeguarding business outcomes in an increasingly complex global tax environment.

USA

May 13, 2026: IRS Announces Time-Limited Settlement Initiative for Conservation Easement Disputes[5]

The IRS (IR-2026-65) announced a time-bound settlement program for eligible partnerships involved in conservation easement disputes, under which participants must forgo the charitable contribution deduction and resolve their cases within a defined window. The initiative aims to resolve a large inventory of pending cases. Eligible partnerships will receive individualized letters setting out their settlement terms, with a 90‑day window (with an additional 45‑day period available at higher penalty rates). During the initial period, a substitute deduction broadly reflecting out-of-pocket costs is allowed, along with a 10% gross valuation misstatement penalty and applicable interest. Settlements concluded in the extended window will be subject to a 20% penalty. The initiative excludes various categories, including cases already tried and awaiting opinion, those on appeal, previously settled matters, and designated test cases unless all bound cases settle. Eligibility will be determined by the IRS based on case status and other considerations.

May 20, 2026: IRS Issues Final Rules on Reporting for Partnership Interest Transfers[6]

The IRS issued final regulations (T.D. 10048) amending Treasury Regulation § 1.6050K‑1 to refine reporting requirements for transfers of partnership interests involving IRC § 751(a) “hot assets,” the income from which is treated as ordinary income instead of capital gains under IRC § 741. The regulations adopt the proposed 2025 rules without change and provide targeted relief under the Form 8308 regime. Partnerships are no longer required to furnish Part IV (detailed “hot asset” computations) to transferors and transferees by the statutory deadline. Instead, only Parts I–III (identification and transaction details) are required to be shared, aligned with updated form instructions. Partnerships must continue to file a complete Form 8308, including Part IV, with Form 1065 and report relevant section 751(a) information through Schedule K‑1. The regulations apply to taxable years beginning on or after May 20, 2026.

May 29, 2026: US Grants Transition Relief to Sovereign Investors Under Section 892[7]

The IRS issued proposed regulations providing transition relief and grandfathering protection for sovereign wealth funds under Section 892, addressing the applicability of the rules introduced in December 2025. The new guidance defers the effective dates of the earlier proposed rules and clarifies that legacy debt and equity investments, including those entered into pursuant to pre‑existing binding commitments, will generally continue to be governed by the existing regulatory framework. While the substantive provisions relating to debt acquisitions being treated as commercial activity and the determination of “effective control” remain unchanged, the regulations provide that such rules will apply only from the later of (i) 90 days after publication of the final regulations or (ii) the beginning of the taxpayer’s first taxable year thereafter, thereby allowing additional time for restructuring and planning. The comment period on the 2025 proposed regulations has also been reopened until July 31, 2026.

Canada

May 4, 2026: Canada Moves To Introduce UTPR Under Pillar Two Framework[8]

On May 4, 2026, Canada tabled the Budget 2025 Implementation Act, No. 2 (Bill C-31), introducing the undertaxed profits rule (UTPR) into the Global Minimum Tax Act through a new Part 2.1, thereby completing its adoption of the OECD GloBE Rules under Pillar Two. Canada's 2024 legislation had already implemented the income inclusion rule (IIR) and a qualified domestic minimum top-up tax (QDMTT); the proposed UTPR operates as a secondary rule to tax low-taxed profits not otherwise captured by an IIR or a QDMTT. Applying to fiscal years beginning on or after December 31, 2025, the UTPR makes Canadian constituent entities liable for their allocated share of the Canadian UTPR top-up amount, apportioned by a formula that weighs employees and tangible asset carrying values equally. The bill also incorporates safe harbors reflecting the OECD's January 2026 administrative guidance, including the Side-by-Side and Ultimate Parent Entity safe harbors (from January 1, 2026), a transitional UTPR safe harbor, and a one-year extension of the transitional CbCR safe harbor. Additional technical amendments align the Global Minimum Tax Act with OECD guidance on pre-GloBE deferred tax assets.

Ireland

May 1, 2026: Ireland Issues Guidance on Tax Transparency and Withholding Tax Treatment of Investment Limited Partnerships[9]

Irish Revenue has released updated guidance on the tax treatment of Investment Limited Partnerships (ILPs), reaffirming their transparent status for Irish tax purposes, whereby income, gains, and losses are attributed directly to the partners. The guidance further clarifies that ILPs may benefit from an exemption from dividend withholding tax on distributions received from Irish subsidiaries, subject to prescribed ownership and compliance requirements. However, for interest withholding tax purposes, ILPs continue to be treated as separate persons, with interest payments remaining potentially subject to withholding tax unless a relevant exemption is available.

May 15, 2026: Irish High Court Rejects Trading Expense Treatment of Foreign Royalty Withholding Tax[10]

The Irish High Court, in Accenture Global Solutions Limited v. The Revenue Commissioners (2026) IEHC 305 held that foreign withholding tax (FWHT) on royalty income cannot be deducted as a trading expense, even where no effective credit relief is available. Accenture Global Solutions Limited, an Irish-resident entity centrally owning and licensing the group's intellectual property, received royalties from overseas operating entities subject to FWHT at gross rates ranging from 10% to 31.50%. Being loss-making for Irish tax purposes between 2010 and 2012 and unable to utilise foreign tax credits, the taxpayer sought to treat the FWHT as a deductible trading expense to augment carry-forward losses. Reversing the Tax Appeals Commission, the court held that FWHT is a tax on income for which relief is governed exclusively by the statutory foreign tax credit regime, which is self-contained and exhaustive. The unavailability of effective credit relief in loss years does not open the door to deduction, as such tax represents an application of income rather than an expense incurred to earn profits.

May 26, 2026: Ireland Introduces Detailed Guidance on Pillar Two Compliance[11]

On May 26, 2026, the Irish Revenue issued guidance on compliance with top-up tax reporting under Pillar Two. The guidance clarifies that Irish entities within a multinational group must either file a top-up tax information return locally or submit a notification when the filing is done in another jurisdiction, typically by the ultimate parent or a designated entity under an exchange framework. When the return is filed abroad, the Irish entity must confirm the identity and location of the filer and that the information will be exchanged with Ireland. The guidance also allows groups to designate a single Irish entity to manage the process and to file the required return or notification on behalf of all Irish group entities. Filing is generally due within 15 months of the end of the fiscal year, extended to 18 months for the first year, with the initial deadline pushed to June 30, 2026. 

Italy

May 3, 2026: Italian Supreme Court Holds Trustee Discretion Defeats "Identified Beneficiary" Status Under the Italian Income Tax Code[12]

The Italian Supreme Court held that, for purposes of the transparency (look-through) regime applicable to foreign trusts under Article 73(2) of the Italian Income Tax Code (TUIR), a beneficiary is treated as an ‘identified beneficiary’ only when the beneficiary has a present, legally enforceable right to claim allocation of the trust’s income from the trustee. Mere nomination in the trust deed is not sufficient when the trustee retains discretion over whether, when, and how much to distribute. The case concerned an Italian resident who settled a New York trust in 2004. For the 2007 period, the Trento tax office imputed the trust's dividends, interest, and capital gains directly to him by transparency, under Articles 44(1)(g-sexies) and 73(2) TUIR, treating the trust as transparent. The lower appellate court found him to be an identified beneficiary based on his express designation in the deed. Overturning that decision, the Supreme Court ruled that the trustee's discretion over whether, when, and how much to distribute meant the taxpayer could not compel any allocation and therefore held no actual entitlement to the income, a position incompatible with transparent treatment. The ruling confirms a settled orientation rather than breaking new ground: it is consistent with the court’s earlier case law and the tax authorities’ position (Circular 34/E/2022), under which transparency requires a current, vested right to the income. The practical consequence is that the trust is classified as opaque, which shifts taxation from attribution at the trust level to taxation upon distribution to the beneficiary, rather than eliminating taxation altogether, a distinction reinforced by the post-2019 rules that, in certain cases, subject distributions from opaque trusts established in privileged-tax jurisdictions to taxation as capital income in the hands of the resident beneficiary.

May 06, 2026: Italy Supreme Court Denies Foreign Tax Credit Due To Tax Return Filing Lapses[13]

On May 6, 2026, the Italian Supreme Court held that, under Article 165(8) TUIR, a foreign tax credit can be claimed only if the taxpayer files the tax return for the relevant year and reports the corresponding foreign-source income and credit in that return, treating these requirements as substantive conditions rather than mere procedural formalities. The court denied the credit because the taxpayer failed to file returns for certain years and instead claimed the credit in a later year, emphasizing that the credit must be claimed in the year the income arises, except where specific rules allow an adjustment if the foreign tax becomes final later. It further clarified that, even where no domestic filing obligation exists, a return must still be filed to access the credit, and non-compliance results in denial of relief. This decision applies the domestic rule in a setting where no treaty credit obligation was at issue, and it should be read against a competing line of authority for treaty-covered income. In a ruling handed down only weeks later, the same section held that the credit obligation under the Italy–Germany Convention applies even where the return was omitted or the foreign income was not reported, because Article 165(8) cannot limit the effect of the Convention. An earlier decision likewise held that the Convention’s overriding double-taxation-relief principle prevails over the domestic limitation. The picture is therefore one of genuine tension: Article 165(8) governs in the absence of an applicable treaty credit obligation, but where a double tax convention applies, the more recent authority points the other way, a distinction that is decisive for most cross-border, treaty-covered income.

France

May 27, 2026: France Approves GIR MCAA for GloBE Information Exchange[14]

The Council of Ministers has cleared France's entry into the Multilateral Competent Authority Agreement on the Exchange of GloBE Information (GIR MCAA), advancing the country's participation in Pillar Two of the OECD/G20 Inclusive Framework. Under the GloBE Model Rules, in-scope multinational groups must lodge an annual GloBE Information Return (GIR). The GIR MCAA provides the channel through which participating jurisdictions automatically share that return data with one another, and it qualifies as a Qualifying Competent Authority Agreement for purposes of the GloBE Model Rules.

May 28, 2026: France Backs OECD Common Understanding on Centralized GIR Filing[15]

The French tax authorities issued a statement endorsing the OECD's recently published common understanding on centralized filing of the GIR. During the transitional filing period, France will accept centralized submission of the GIR by the ultimate parent entity or a designated group entity, provided the return is filed by the relevant deadline in one of the jurisdictions listed in the annex to the common understanding. When this applies, French constituent entities of in-scope groups need not lodge a local GIR, so long as the centrally filed return can be made available to the French authorities within the prescribed limits, namely, six months after the filing deadline. Subject to compliance with French notification obligations, the authorities will take a lenient stance on penalties during this period. However, if the centrally filed GIR is not made available within six months of the deadline, the authorities may demand local filing and impose late-filing penalties until French obligations are met.

Germany

May 19, 2026: Germany Consults on Draft Annual Tax Act 2026 and Side-by-Side Package Implementation[16]

The Ministry of Finance released the draft Annual Tax Act 2026 for public consultation, providing technical amendments across various tax laws to reflect EU law and ECJ (Court of Justice of the European Union) rulings. Key measures include: extending automatic exchange of platform data to third countries beyond DAC7; granting full child allowances for children resident in the EU/EEA; raising the royalty withholding exemption threshold from EUR 10,000 to EUR 100,000; lifting the per-project R&D tax credit cap from EUR 15 million to EUR 25 million; increasing late-payment interest from 0.15% to 0.3% monthly from January 1, 2027; raising the withholding threshold for non-resident artistic and similar services from EUR 250 to EUR 500; and reforming VAT grouping so consequences arise only upon express declaration, with partnerships able to qualify. The draft also implements the OECD Side-by-Side Package, introducing the Side-by-Side and UPE Safe Harbors and extending the transitional CbCR Safe Harbor to fiscal years beginning on or before December 31, 2027. The consultation period ended on June 12, 2026.

May 27, 2026: Germany's Federal Cabinet Clears CARF MCAA[17]

The Federal Cabinet (Bundesregierung) has approved the Multilateral Competent Authority Agreement on the Automatic Exchange of Information under the Crypto-Asset Reporting Framework (CARF MCAA). The agreement enables the automatic exchange of tax-relevant crypto-asset information, in line with the reporting and due diligence procedures established under the Crypto-Asset Reporting Framework (CARF). Both CARF and the CARF MCAA are OECD initiatives developed to address the expanding crypto-asset market and uphold international tax transparency standards.

May 27, 2026: Germany's Federal Cabinet Clears Addendum to CRS MCAA[18]

The Federal Cabinet has passed an addendum to the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information (2024) (the Addendum to the CRS MCAA). The Addendum introduces additional information items for exchange under the CRS MCAA, giving effect to the expanded reporting requirements introduced by the 2023 update to the Common Reporting Standard. These enhancements are intended to keep the CRS robust in meeting evolving international tax compliance challenges.

Belgium

May 18, 2026: Belgium Establishes Opt-Out Regime for Withholding Tax on Capital Gains from Shares and Crypto[19]

The Ministry of Finance has gazetted a Royal Decree giving effect to the 2026 capital gains tax on shares and crypto, inserting Article 85/1 into the Royal Decree implementing the Income Tax Code to operationalize article 265/1 ITC. While such gains are generally collected via withholding tax on financial instruments and insurance contracts, taxpayers may elect to opt out to avoid pre-financing, forgoing recognition of historical acquisition values and capital losses. The opt-out must be exercised unambiguously and in writing (interpreted in a technology-neutral manner) when an account is opened or before the first gain arises; for gains realized between June 1, 2026, and August 31, 2026, the deadline is August 31, 2026. Affected taxpayers must file annual statements before March 1 of the following year, identifying account holders or insurance beneficiaries. An opt-out is presumed for gains realized up to August 31, 2026, absent a written request to apply withholding tax. The Decree applies from June 1, 2026.

Netherlands

April 29, 2026: Government Clarifies Treatment of Domestic Top‑up Taxes in Participation Credit under Omnibus Bill[20]

The Netherlands has proposed the Omnibus Tax Bill 2027, introducing several technical amendments to the tax legislation. A key proposal clarifies that qualifying domestic top-up taxes will be considered in determining participation credits and certain foreign tax credits. This is particularly relevant where the participation exemption is unavailable for low-taxed portfolio investments, including passive portfolio investments that fail the asset test, under which more than 50% of a subsidiary's assets comprise non-business-related portfolio investments. In such cases, taxpayers may instead be eligible for a participation credit, and the proposed clarification provides greater certainty regarding the treatment of domestic top-up taxes in computing the available relief.

May 21, 2026: Netherlands Announces Temporary Tax Measures To Address Energy Crisis[21]

The Netherlands has announced a set of temporary tax measures aimed at cushioning the effects of the energy crisis. The measures include increasing the tax-free mileage allowance and travel expense deduction from €0.23 to €0.25 per kilometer, effective retroactively from January 1, 2026. In addition, temporary reductions in motor vehicle tax will apply to commercial vans and trucks. The measures are contained in Decree No. 2026-8260 of May 17, 2026, published in Official Gazette No. 18302 on May 21, 2026.

May 22, 2026: Dutch Government Gazettes Revised Business Succession Rules[22]

A new Dutch decree has been gazetted, setting out revised guidance on the Business Succession Facility for inheritance and gift tax, replacing the earlier framework. The decree introduces targeted relaxations in complex succession scenarios such as transfers shortly before death, succession on the death of a spouse, and arrangements involving matrimonial property by allowing business succession relief to apply even where strict legal ownership conditions are not technically met, provided the relevant holding and continuity requirements are satisfied. It also confirms that the relief can apply to indirect share transfers and certain internal reorganizations, subject to continuation conditions. In addition, it provides clarity on the treatment of preferred shares arising from historical restructurings and tax-neutral conversions, ensuring that relief is available where the underlying business continues. Further, the possession requirement is applied more flexibly in cases such as share reclassification, certification, and matrimonial property situations. Overall, the decree reduces technical hurdles and provides greater certainty in applying the relief in genuine business succession cases, while retaining safeguards against misuse.

May 27, 2026: Netherlands Introduces New Rules on Tax Debt Relief and Collection Procedures[23]

On May 27, 2026, a ministerial regulation was gazetted to reform the tax collection framework, with the new rules scheduled to take effect on January 1, 2027. Under the new approach, decisions on tax debt deferral and forgiveness will follow the standard tax dispute process, allowing taxpayers to first file objections and then appeal before tax courts, replacing the current system of internal administrative review with limited recourse to civil courts. The regulation also formalizes existing practices by clearly defining when tax debt relief may be denied, such as in cases of non-compliance, incorrect disclosures, availability of other liable parties, or provision of collateral, and sets out structured conditions for participation in debt restructuring agreements. The transitional provisions specify that cases decided before 2027 will continue to be governed by the existing rules.

May 31, 2026: Update on Amendments to the Definition of Fund for Joint Account[24]

Following the public consultation on the proposed amendments to the Fund for Joint Account (FGR) definition, the Dutch Ministry of Finance has indicated that any legislative changes are not expected to take effect before January 1, 2028. In addition to the opt-out regime proposed in the consultation (i.e., an active election to qualify as tax transparent despite qualifying as an FGR), the Ministry is now also exploring an opt-in regime (i.e., tax transparent by default unless there is an active election to qualify as tax opaque).

Switzerland

May 1, 2026: France and Switzerland Sign New Mutual Agreement Clarifying Telework Rules Under Double Taxation Treaty[25]

France and Switzerland have formalized their understanding of the tax treatment of cross‑border employees undertaking telework through a mutual agreement in accordance with the applicable double taxation treaty. The agreement specifically addresses the interaction between the 10‑day allowance for temporary work and the 40% telework threshold by laying down common rules for their application and calculation. This is intended to eliminate ambiguity, ensure uniform application of treaty provisions, and reduce the risk of double taxation for cross-border employees, as well as the associated risks for employers. The agreement entered into force on April 30, 2026, and applies retrospectively from January 1, 2026, in line with the amended treaty provisions.

May 1, 2026: Switzerland Continues Withholding Tax Exemption for TBTF Instruments[26]

Switzerland has approved a further extension of the withholding tax exemption on interest payable on certain TBTF instruments (i.e., the instruments issued by financial institutions too big to fail), such as bail‑in and write‑off bonds. The measure extends the previously introduced temporary relief, ensuring that such instruments can continue to be issued under the existing tax treatment. The extension is intended to provide continuity while a permanent exemption is discussed. The extended tax exemption will apply from January 1, 2027, and remain in force until December 31, 2031, following legislative approval and the expiry of the referendum period.

United Kingdom

May 11, 2026: UK Introduces Inheritance Tax on Unused Pension Funds From April 2027[27]

On May 11, 2026, His Majesty's Revenue and Customs (HMRC) released a technical note confirming that, from April 6, 2027, most unused pension funds and related death benefits will be brought within the scope of inheritance tax under the Finance Act 2026, with the aim of curbing their use as a tax-efficient wealth transfer mechanism. The note sets out how the rules will operate in practice, including the timing at which notional pension property is treated as having vested in a beneficiary and the corresponding point at which the inheritance tax liability arises, responsibility for reporting and payment, valuation of overseas pension schemes, administrative processes for estates, identification of personal representatives along with guidance on scope, exclusions, exempt beneficiaries, and information‑sharing requirements, with further guidance to follow ahead of implementation.

May 12, 2026: UK Rolls Out Advance Tax Certainty Framework for Major Investments[28]

On May 12, 2026, HMRC released guidance introducing the Advance Tax Certainty Service, which will launch on July 1, 2026, for major investment projects involving at least GBP one billion of qualifying UK expenditure. The service enables businesses to obtain binding clarity in advance on the application of UK tax laws, covering areas such as corporation tax, VAT, stamp duties, income tax, Pay As You Earn (PAYE) regulations, and the construction industry scheme (excluding transfer pricing matters). It outlines a structured process involving an initial engagement with HMRC followed by a formal application, with clearances generally expected within 90 days, and aims to reduce tax uncertainty, support investment decisions, and enhance transparency in the UK tax environment.

May 18, 2026: HMRC Issues Guidance on Targeted Advance Assurance for Small and Medium-Sized Enterprises’ R&D Claims[29]

His Majesty's Revenue and Customs (HMRC) has released guidance on a new targeted advance assurance scheme, also referred to as the advance assurance pilot, enabling eligible small and medium-sized enterprises (SMEs) to secure certainty on up to two specific complex or high-risk aspects of an R&D tax relief claim. To qualify, a company must be an SME, be undertaking or planning R&D in the relevant accounting period, not yet have claimed relief for that period, and not have previously obtained assurance on the same aspects for that period. Applications may be submitted online by the company or its agent, with each of the two permitted applications limited to a single project and a single area of relief. HMRC aims to process submissions within 40 calendar days, issuing a confirmation or explanatory letter accordingly. Assurance does not replace a formal claim, which must still be made in the tax return. The pre-existing full advance assurance scheme remains available.

May 18, 2026: HMRC Opens Consultation on Draft Regulations for Inheritance Tax on Unused Pension Funds[30]

HMRC has launched a consultation on draft regulations supporting the application of inheritance tax (IHT) to unused pension funds, building on the legislative framework enacted under the Finance Act 2026 and a recent HMRC technical note outlining its main principles. The draft Registered Pension Schemes (Provision of Information) (Amendment) Regulations 2026 amend the existing information sharing rules to align them with the new IHT charge on pension amounts remaining unused at the date of the taxpayer's death. The proposed regulations identify specific categories of pension fund amounts that must be reported and confirm that pension scheme administrators are required to file a report whenever they discharge IHT on behalf of personal representatives or beneficiaries. The consultation period runs until June 11, 2026.

May 19, 2026: HMRC Adopts OECD Transitional Approach on GIR Filing Relief[31]

HMRC has issued guidance aligning with the OECD's transitional approach to Pillar Two Global Information Return (GIR) filings due no later than December 31, 2026. The guidance follows the OECD's recent paper setting out a common understanding among implementing jurisdictions, together with further administrative guidance, to ease compliance with the central filing and exchange of GIRs. The approach is designed to mitigate disruption arising from delays in operational filing portals or exchange relationships under the global minimum tax (GMT), with participating jurisdictions, including the UK, agreeing to waive penalties or hold back enforcement of local filing obligations where the GIR has been centrally filed in another participating jurisdiction. HMRC has confirmed that it will not enforce UK local filing of a GIR and will reduce specified penalties to nil, provided the return is centrally filed in a listed participating Pillar Two jurisdiction and the information is received within six months of the filing deadline. Corporate groups must also submit their overseas return notification to HMRC on time to qualify.

May 21, 2026: UK Chancellor Proposes VAT Cuts and Reform of Foreign Branch Profit Taxation[32]

Chancellor of the Exchequer Rachel Reeves, in a statement to the House of Commons, outlined a package of tax measures aimed at easing cost of living pressures intensified by the conflict in Iran. Building on earlier announcements, the proposals include a 10 pence per mile rise in tax-free mileage rates, backdated to April 2026, and revisions to foreign branch profit rules to curb arrangements under which such branches pay minimal corporation tax on UK energy trading income. Tariffs on more than 100 supermarket food items would be suspended. A temporary "Great British Summer Savings scheme" would lower the VAT rate on summer attractions from 20% to 5%, covering adult and child admission to venues such as theme parks, zoos, and museums, alongside children's tickets for cinemas, concerts, soft play, and theater. VAT on children's restaurant and café meals would similarly fall to 5%. The VAT measures apply UK-wide from June 25, 2026, to September 1, 2026.

May 21, 2026: Mandatory Foreign PE Exemption[33]

The UK government has announced that the foreign permanent establishment (PE) exemption will be made mandatory for UK‑resident companies. Under the current regime, UK‑resident companies are subject to UK corporation tax on the profits of their foreign PEs, with an option to elect for exemption; where no such election has been made, foreign PE losses may be available for set‑off against UK profits of the company or its wider group. Under the proposed changes, the exemption regime will apply mandatorily to most companies for accounting periods beginning on or after January 1, 2027, while for UK‑resident companies with foreign PEs engaged in activities connected with the exploration or exploitation of oil and gas, the measure will take effect from September 1, 2026, with a deemed accounting period end on August 31, 2026. The reforms will also be supported by an anti‑avoidance rule aimed at preventing arrangements that seek to artificially accelerate the utilization of losses, with draft legislation expected to be released in Summer 2026.

Hong Kong

May 19, 2026: Hong Kong Proposes Wider Tax Deductions for IP Transactions[34]

Hong Kong outlined proposals to expand tax deductions for certain Intellectual Property (IP) transactions to strengthen its position as an IP trading hub. The proposals, tied to Budget 2026/27, would apply to IP purchases or licensing rights on or after April 1, 2026. The changes would permit deductions on IP acquired from related parties, subject to safeguards such as a main purpose test, anti-avoidance rules, and valuation requirements. Upfront license fees may also become deductible if linked to taxable income, regardless of their nature. In addition, proportionate deductions could apply to offshore IP use where the related income is taxed in Hong Kong.

May 20, 2026: Hong Kong Moves To Implement Crypto Reporting and Updated Common Reporting Standard[35]

Hong Kong has introduced a bill to implement the OECD’s Crypto-Asset Reporting Framework (CARF) and updates to the Common Reporting Standard (CRS), which was gazetted on May 22, 2026, and is set for first reading on June 3, 2026. The proposal requires crypto-asset service providers with a Hong Kong nexus to register with the Inland Revenue Department and comply with due diligence, reporting, and record-keeping obligations. CARF is expected to be implemented in 2027, with the first automatic exchange of crypto-related tax information anticipated in 2028, alongside the revised CRS.

India

May 7, 2026: Interest on Borrowed Funds Deductible Despite Downstream Use by Subsidiary[36]

The Supreme Court (SC), in the case of L.K. Trust v. CIT, held that interest on capital borrowed is allowable as a deduction under Section 36(1)(iii), even where the borrowed funds are utilized for investments benefiting a subsidiary or group concern, provided the borrowing is for the purposes of business. The SC clarified that Section 36(1)(iii) applies strictly to interest on money borrowed (and not all debts) and emphasized that the expression “for the purpose of business” has a wide scope, covering transactions undertaken on grounds of commercial expediency. Rejecting the High Court’s view, the SC ruled that deploying funds through a group structure does not disentitle a deduction if an overall business nexus exists, thereby reinforcing that interest deductibility depends on business purpose rather than direct income generation.

May 11, 2026: ITAT Allows Selective DTAA Benefits; Rejects Forced Aggregation of Capital Gains/Losses[37]

The Mumbai ITAT, in the case of Alibaba.com Singapore E-Commerce Pvt. Ltd. v. DCIT, held that a taxpayer can selectively apply the provisions of the Income-tax Act or the India-Singapore Double Tax Avoidance Agreement (DTAA) on a transaction-wise basis, treating each investment as a separate “source of income.” The ITAT allowed exemption of long-term capital gains on shares acquired prior to April 1, 2017, under Article 13(4A) of the DTAA, while permitting the carry-forward and set-off of capital losses from other transactions under domestic law. Rejecting the Revenue’s aggregation approach, the ITAT clarified that DTAA-exempt gains cannot be forced into computation under the Income Tax Act, as Section 90(2) grants taxpayers the right to adopt the more beneficial regime for each source, thereby preventing indirect taxation of exempt income.

May 5, 2026: ITAT Allows Provision on ‘Standard Assets’; Upholds Sec 36(1)(viia) Deduction[38]

The Chandigarh ITAT (Special Bench), in the case of Malwa Gramin Bank v. DCIT, held that provisions for standard assets created in accordance with RBI guidelines are eligible for deduction under Section 36(1)(viia), even though such assets are not non-performing. The ITAT observed that the provision for bad and doubtful debts under the section should be interpreted liberally, as standard assets also carry inherent credit risk and provisioning is mandated for prudential purposes. Accordingly, it is ruled that the deduction is allowable for such provisions, provided they are made in the books and fall within the prescribed statutory limits, thereby expanding the scope of allowable deductions for banking entities beyond Non-Performing Assets alone.

Indonesia

May 4, 2026: Indonesia Issues Detailed Rules for Global Minimum Tax Compliance[39]

Indonesia’s Directorate General of Taxes issued Regulation No. PER-6/PJ/2026 to operationalize the global minimum tax framework introduced under MoF Regulation No. 136 of 2024. The rules apply to large multinational groups with consolidated revenue of at least EUR 750 million, outlining procedures for registration, compliance, and reporting under the OECD/G20 Pillar Two regime. In-scope entities must register within nine months of their first GloBE tax year and file annual returns including GloBE annual income tax return, Domestic Minimum Top-up Tax (DMTT) return, and Under-taxed Payments Rule (UTPR) return filings generally within four months after the end of the GloBE tax year. The regulation also mandates submission of GloBE information returns in electronic format (XML) within 15 months (or 18 months initially) and prescribes mechanisms for top-up tax payments, audits, and dispute resolution, strengthening Indonesia’s implementation of the 15% minimum effective tax framework.

Singapore

May 9, 2026: The GST Board of Review Denies Input Tax Where Transactions Lack Commercial Reality[40]

This case concerns whether the Comptroller of Goods and Services Tax (the Comptroller) incorrectly denied the appellant's claim for input tax related to goods supplied to the appellant in numerous disputed transactions during an accounting period, in a case of missing trader fraud. The Goods and Services Tax Board of Review dismissed the appeal because the appellant failed to prove, on a balance of probabilities, that the goods described in the tax invoices were genuinely supplied or that the transactions were part of a legitimate business.

South Korea

May 1, 2026: Korea Rolls Out First GMT Filing Framework[41]

The Korean National Tax Service (NTS) announced the commencement of the first Global Minimum Tax (GMT) filing period, with the filing window opening on May 1, 2026, and returns and payments due by June 30, 2026. The GMT regime applies to fiscal years beginning on or after January 1, 2024. The NTS has issued filing notices to 2,547 Multinational Enterprise (MNE) groups, covering a total of 10,188 Korean constituent entities, including both Korean resident companies and foreign entities operating through a permanent establishment in Korea. Entities within scope are required to electronically submit a GMT Information Return and, where applicable, a Top-Up Tax Return via the Hometax system within the prescribed timeline.

Vietnam

May 5, 2026: Vietnam Clarifies/Amends Regulations on VAT Exemptions and Input VAT Credit[42]

Vietnam has issued Decree No. 144/2026/ND-CP (Decree 144) dated May 5, 2026 (with effective from June 20, 2026) to clarify/amend regulations on VAT exemptions, inter alia for regulated insurance services and debts trading. Decree 144 also regulates that VAT need not be calculation on revenue from insurance brokerage commissions that are not subject to VAT, while expanding the VAT taxable revenue for input VAT allocation to include VAT non-declarable revenue. Decree 144 also allows provisional input VAT credit for credit or instalment purchases of VND five million and above where non-cash payment has not yet been made under contractual/agreements terms (subject to conditions such as contracts, agreements, and invoices), disallow input VAT where non-cash payment is not available at the time of payment under contractual/agreements terms, and permits subsequently input VAT reclaim upon obtaining the required non-cash payment evidence, thereby providing greater clarity in VAT treatments for taxpayers.

Thailand

May 20, 2026: Thailand Tightens BOI Reporting Requirements for Promoted Companies[43]

The Thailand Board of Investment (BOI) has amended the reporting period for the submission of progress reports, which were previously required to be filed twice a year (in February and July), following the issuance of the BOI promotion certificate. Under the new requirement, BOI-promoted companies are required to submit progress reports four times per year, on a quarterly basis, starting from the issuance date of the BOI promotion certificate until the project has been granted approval for the official commencement of operations. The progress reports must be submitted within 30 days from the end of each quarter (i.e., Q1 – by the end of April, Q2 – by the end of July, Q3 – by the end of October, and Q4 – by the end of January of the following year). For projects approved during a quarter, the first progress report is required to be submitted in the subsequent reporting quarter. Non‑compliance with these requirements may result in suspension of incentives and privileges granted under the promotion certificate, and continued non‑compliance (i.e., failure for two consecutive periods) may lead to revocation of such incentives and privileges.

Qatar

May 6, 2026: Qatar Clears Draft Law and Executive Regulations For E-Invoicing[44]

Qatar moved forward with draft legislation and executive regulations to implement an e-invoicing framework. The proposed rules seek to establish the legal foundation for the issuance and acceptance of electronic invoices while enhancing transparency, supporting digital transformation, and strengthening data accessibility for regulatory and supervisory purposes.

United Arab Emirates

May 8, 2026: Federal Tax Authority Issues Guidance on Director and Officer Classification for Connected Persons [45]

The Federal Tax Authority (FTA) issued Corporate Tax Public Clarification CTP010, outlining when directors and officers are treated as Connected Persons under the Corporate Tax Law for deductibility and disclosure purposes. Payments or benefits to such individuals remain deductible only if they are at arm’s length and incurred wholly for business purposes, with disclosure required when thresholds are exceeded. The clarification adopts a substance-over-form approach, defining directors and officers based on their functions, responsibilities, and decision-making authority rather than job titles alone. It also confirms that only natural persons can qualify under these definitions and that the rules apply across various types of entities, including trusts and partnerships. CTP010 further states that, when a person qualifies as both a Related Party and a Connected Person, only the Related Party rules apply. The guidance reflects the FTA’s administrative interpretation and applies to tax periods beginning on or after June 1, 2023.

Bahrain

May 21, 2026: National Bureau for Revenue (NBR) Releases Revised Tax Agent and VAT Representative Framework[46]

The National Bureau for Revenue (NBR) issued an updated Tax Agent/VAT Representative Guide (version 2.0), providing revised procedures for the authorization and appointment of tax agents and VAT representatives for VAT and domestic minimum top-up tax matters. The guidance outlines the distinct roles of tax agents and VAT representatives, including the joint liability obligations applicable to representatives of non-resident VAT taxpayers. Eligible individuals and entities may apply for authorization, subject to Bahrain residency criteria, with a BHD 300 application fee and a three-year authorization period, renewable upon payment of the applicable fee. In addition, the guide details online portal features covering appointment management, client administration, account updates, renewals, and deregistration.

Australia

May 1, 2026: Treasury Releases Draft 2026 Measures No. 2 Rules for Consultation[47]

Australia issued the draft Taxation (Multinational – Global and Domestic Minimum Tax) Amendment (2026 Measures No. 2) Rules 2026 for public consultation. The draft proposes a one-year extension of the Transitional CbCR Safe Harbor, along with a number of further technical amendments to Australia’s Pillar Two rules. 

May 5, 2026: Australia Begins First Pillar Two Filing Cycle[48]

The Australian Taxation Office (ATO) has opened online lodgment channels for Pillar Two filings, enabling MNEs to submit the GloBE Information Return and the Combined Global and Domestic Minimum Tax Return (CGDMTR). Initial filings are due by June 30, 2026, with a transitional 30-day administrative deferral granted for first-year compliance. The ATO has also released supporting guidance and technical materials to help businesses prepare for reporting under the new framework.

May 12, 2026: Australia Advances Federal Budget 2026–27 Tax Reform Agenda With First Legislative Measures Introduced[49]

Australia’s Federal Budget 2026–27, delivered on May 12, 2026, proposed a range of tax reforms to support households, housing affordability, and business investment, including a Working Australians Tax Offset of up to AUD 250 from FY 2027–28, an AUD 1,000 standard deduction from FY 2026–27, a permanent AUD 20,000 instant asset write-off for small businesses, restrictions on negative gearing to newly built residential properties and changes to the capital gains tax regime, including replacing the 50% CGT discount with an inflation-based approach and introducing a minimum 30% tax on real capital gains from July 1, 2027. On May 29, 2026, the government introduced the first tranche of legislation to implement several of these measures, which remain subject to legislative approval.

New Zealand

May 21, 2026: Inland Revenue Seeks Feedback on GST Treatment of Financial Intermediation Services[50]

Inland Revenue has issued a draft Interpretation Statement (PUB00463, dated May 21, 2026) for consultation, outlining the GST treatment of services involving the arranging and brokering of financial products. The draft clarifies that intermediaries may qualify for a GST exemption when their role constitutes “arranging” financial services, provided their involvement is integral to the supply chain. It distinguishes such activities from advisory services, which remain taxable. The guidance also highlights the need to assess whether services are single or multiple supplies and notes that apportionment may apply where both exempt and taxable elements exist. Public submissions are invited until July 2, 2026.

• On May 6, 2026, the Office of the US Trade Representative (USTR) initiated its second statutory four-year review of two Section 301 trade actions against China, examining the continuation of 25% duties imposed in 2018 on roughly USD 50 billion of Chinese imports. The actions followed an investigation into China's technology transfer, intellectual property, and innovation practices: the first (effective July 6, 2018) applied a 25% duty to around USD 34 billion of imports, and the second (effective August 23, 2018) to approximately USD 16 billion. The USTR has notified representatives of domestic industries that the actions will lapse unless continuation is requested. Requests can be submitted during two 60-day windows — May 7, 2026, to July 5, 2026, for the July 2018 action, and June 24, 2026, to August 22, 2026, for the August 2018 action, with separate filings required for each. The comment period closes on August 22, 2026[51].
• On May 7, 2026, in a split decision, the US Court of International Trade (CIT) invalidated the 10% global tariffs imposed under Section 122 of the Trade Act of 1974. The plaintiffs in the consolidated cases, State of Oregon v. United States and Burlap and Barrel v. United States, challenged the tariffs imposed under Proclamation 11012 after the US Supreme Court invalidated certain IEEPA tariffs. Section 122 permits temporary tariffs of up to 15% for up to 150 days to address “fundamental international payments problems.” The court held that the proclamation exceeded the President’s delegated authority because it relied on trade and current account deficits, not “balance-of-payments deficits,” as required by the statute. The court granted summary judgment and permanent injunctive relief to the importer plaintiffs, preventing the tariffs from being imposed on them. In dissent, one judge would have allowed broader executive discretion and deferred ruling until the appropriate procedural requirements were satisfied.
• On May 13, 2026, the US Department of Commerce issued a notice (X-RIN 0694-XC155) outlining the process for pharmaceutical companies to apply for reduced tariff rates if they commit to locally manufacturing pharmaceutical products and ingredients. The measure responds to Proclamation 11020 of April 2, 2026, under which a baseline tariff of up to 100% ad valorem applies from September 29, 2026, to a defined set of patented pharmaceuticals and ingredients, subject to tiered relief pathways. Applicants must submit detailed localization plans covering organizational data, planned US investment between January 20, 2025, and January 20, 2029, the patented portfolio to be produced domestically, the share of US and global sales produced domestically, and their investment commitment. Approved applicants may secure a reduced 20% rate, or a temporary 0% rate until January 20, 2029, if there is a "most favored nation" pricing arrangement with the US Department of Health and Human Services.[52]
• On May 20, 2026, the Gulf Cooperation Council (GCC), comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates and the United Kingdom concluded negotiations on a bilateral free trade agreement (FTA) intended to deepen trade and investment ties. Once signed and brought in force, the FTA is expected to deliver substantial tariff liberalization, with the GCC removing duties on a large share of UK exports and generating anticipated gains in bilateral trade flows and longer-term economic activity. Beyond goods, the agreement covers trade in services, investment, digital trade, and customs, including commitments to facilitate business mobility, broaden market access for service providers, safeguard cross-border data flows, and streamline and improve transparency in customs procedures.[53]
• On May 20, 2026, the Council of the European Union and the European Parliament reached a provisional agreement on two regulations implementing the tariff commitments in the EU-US Joint Statement of August 21, 2025, aimed at improving trade stability while safeguarding the EU's economic interests. One regulation eliminates residual duties on US industrial goods and introduces limited tariff concessions (including quotas) for select seafood and non‑sensitive agricultural products. The other extends the duty suspension on lobster, including processed products. The agreement incorporates a safeguard framework, enabling the European Commission to review import surges and suspend benefits when EU industry is adversely impacted. It also broadens suspension triggers, including non‑compliance by the United States and continued tariffs above 15% on EU steel and aluminum derivative products beyond December 31, 2026. The measures are subject to a sunset clause ending in 2029, unless extended, and will be monitored through periodic Commission reporting. The lobster regulation will apply retroactively from August 01, 2025.[54]
• The US Court of International Trade has declined to stay its earlier injunction against the temporary 10% import surcharge introduced through Proclamation 11012, reiterating that the measure exceeded the authority granted under Section 122 of the Trade Act of 1974. The court held that the government did not demonstrate irreparable harm, especially given that the injunction applies only to a limited set of plaintiffs, whereas importers would face concrete financial losses if the surcharge continued. It also rejected reliance on broad economic and national security justifications, emphasizing that statutory limits govern presidential action. The case now moves to the appellate court, which will decide whether to continue or modify the temporary stay during the appeal.[55]