Tax leaders are increasingly adopting AI to navigate rising tax controversy risks due to evolving international transparency regimes, according to EY’s 2025 Tax Risk and Controversy Survey. This survey of 2,000 senior tax executives reveals that 92% expect disputes from the OECD’s BEPS Pillar Two initiative, aimed at closing international tax loopholes. Furthermore, 90% anticipate new transfer pricing obligations, like public country-by-country reporting, will increase tax controversies. AI is pivotal in this shift, helping tax teams move from reactive to proactive engagement, enhancing accuracy and efficiency. Of the respondents, 70% have integrated AI for controversy management, with 87% believing it boosts operational efficiency. Despite these advancements, only 31% were ‘very satisfied’ with current approaches, underscoring the need for improved governance strategies. As Joel Cooper from EY emphasizes, effective governance combined with advanced technology can transform tax controversy management into a strategic advantage, enabling firms to respond confidently rather than reactively.
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