2026

The first public country-by-country reports under the EU directive—from Microsoft, Procter & Gamble, and others—drew praise for transparency but warnings from the OECD, business groups, and companies against misreading the data. Microsoft booked 38.1 percent of its worldwide profits in Ireland despite housing under 3 percent of its workforce there, while P&G reported $114 million in tax-free Luxembourg profit tied to a now-liquidated entity, fueling debate over whether the disclosures reveal avoidance or just an incomplete picture.

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Some corporate tax incentives doled out by Latin American countries significantly reduce their effective tax rates, a new report from the OECD found.

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Germany's Bundestag Finance Committee rejected a Greens proposal for a 10 percent digital services tax on big tech, whose German effective tax rate runs about 3.4 percent versus up to 30 percent for domestic firms; the CDU/CSU cited legal concerns and the SPD called it premature. The Greens vow to keep pushing, preferring a coordinated EU-level DST over the U.S.-secured pillar 2 carveout.

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Microsoft's first public country-by-country report under new EU disclosure rules shows the company concentrated 38.1% of its global pretax profit in its Irish hub, where it employs under 7,000 people but generates pretax profit per employee 13 times the worldwide average. The disclosure, filed because Microsoft's fiscal year ends in late June, offers an early look at how multinationals structure intercompany transactions across jurisdictions ahead of similar reporting requirements taking effect in Australia and under the FASB later this year.

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Canada’s decision to deviate from global norms in targeting cross-border tax avoidance structures would weaken investment and raise costs for companies, especially those working with entities in the US, tax professionals say.

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Recent US policy changes are forcing life sciences companies to rethink core commercial decisions in ways that require a reexamination of how intercompany pricing for intangible property is structured and defended. The policy changes come from two directions: measures designed to reduce US drug prices, such as most-favored nation pricing; and tariffs.

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An OECD tax official said the side-by-side package's substance-based tax incentive safe harbor—more than the U.S. safe harbor itself—is driving down projected pillar 2 revenue, since it lets jurisdictions use qualified tax incentives to attract investment while capping top-up tax exposure. The OECD plans to release an updated global minimum tax impact assessment incorporating this and other recent implementation data, following its 2020 initial assessment and 2024 working paper.

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A European Commission staff working document evaluating ATAD found stakeholders view the GAAR's broad, discretionary scope as a source of legal uncertainty, prompting debate over whether Unshell's economic substance criteria should instead be folded into the GAAR or DAC6's hallmark D2—a question the commission has deferred by proposing to address substance via future EU Council implementing acts. The evaluation also flags unresolved tension between the GAAR and pillar 2, with the tax simplification omnibus now clarifying that the GAAR extends to top-up taxes, even as businesses argue CFC rules are increasingly redundant alongside pillar 2.

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President Trump threatened a 100 percent tariff on any country advancing digital services tax legislation, declaring it would apply immediately and override existing trade deals—prompting the European Commission to defend DSTs as a nondiscriminatory sovereign right and warn it will "respond swiftly and decisively" if the EU is targeted. The clash surfaces just as global digital tax talks resume, with German officials pressing for a coordinated international approach on nexus and profit allocation even as valuation questions grow more complex amid rising AI use.

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A new economics paper complicates the story about the Tax Cuts and Jobs Act of 2017. For years, supporters have deemed it a pro-growth success, while critics have called it an expensive giveaway tilted toward corporations and high earners.

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