The political landscape is changing rapidly and this is having knock-on effects on tax and trade policies across the globe. Post several major elections, governments across the globe have been prioritizing local interests and striving to control deficits, leading to intensified efforts in revenue generation, tax enforcement and transparency. After several years of global tax cooperation, there appears a reboot of tax competition on the horizon. Here’s a look at the expected tax and controversy trends, based on EY’s 2025 Tax Policy and Controversy Outlook – an annual survey of EY tax policy and controversy leaders.

Stimulating revenue growth

A central theme for EU Member States is prosperity and competitiveness. Several EU countries are leveraging their tax systems to stimulate economic growth. For instance, Germany’s Growth Opportunities Act introduces measures to enhance loss offsetting, investment incentives, and tax depreciation.

While many jurisdictions refrain from altering their top tax rates, several are introducing new taxes. France, for example, has implemented a temporary new corporate income tax surcharge of 20.6% on large companies with revenues between €1 billion and €3 billion, doubling for those exceeding €3 billion. This trend reflects a broader strategy to increase revenue through targeted tax measures.

Intensified enforcement efforts

Tax authorities are ramping up scrutiny, not only across borders but also within integrated government agencies. The UK for example has allocated funding to hire an additional 5,000 employees for His Majesty’s Revenue and Customs, aiming to enhance compliance and close the tax gap.

Additionally, we are seeing a shift towards mandatory compliance assurance, notably for large companies in developed countries. More and more, firms must show robust tax governance and oversight into their tax operations in real time – this requires operational tax controls and comprehensive documentation. Tax authorities are also grouping companies by risk level – enabling those with strong governance to benefit from reduced audit frequency, and vice versa.

Digital enhancements and Generative AI

The adoption of sophisticated digital systems to streamline operations and reduce fraud risks is transforming tax administration. Slovakia, for instance, will require real-time data reporting starting 1 January 2027. The integration of Generative AI in tax compliance processes is gaining traction, with 39% of tax and finance executives utilizing AI agents for tax controversy management, according to the upcoming 2025 EY Tax Risk and Controversy survey.

Ongoing global collaboration and challenges

The US stance on the OECD’s Base Erosion and Profit Shifting (BEPS) 2.0 project remains uncertain, with recent executive orders signaling resistance to certain provisions. While nearly 50 jurisdictions are set to implement Pillar Two rules, with some provisions already in effect in the EU, several other countries have also since been more vocal about their concerns with the Pillar Two implementation.

The potential for US retaliation and the complexities of international negotiations could lead jurisdictions due to implement Pillar Two to delay adoption, further contributing to global tax uncertainty

In the blink of an eye, government policies continue to evolve. Changing political leadership and rising global tax controversies are rapidly reshaping tax and trade policies in 2025. Governments, under pressure to grow revenue, are driving uncertainty as new policies and trade tensions disrupt supply chains and financial markets. Businesses will need to cautiously consider and respond to these developments.

For a complete view of global tax policy and controversy updates, read our .

(1) The OECD's BEPS 2.0 project aims to combat base erosion and profit shifting by multinational corporations through international tax reforms.

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EY Luxembourg Partner, Tax Controversy Leader

EY Luxembourg Tax Partner, Technology, Media & Entertainment and Telecommunications Sector Leader