Businesses worldwide are struggling with growing operational challenges and higher costs brought on by complex regulatory environments, according to BDO’s latest Global Tax Outlook Report.
The research highlights an uptick in time spent on tax authority queries, with 81% of businesses reporting more such interactions compared to 2023.
The survey of 500 global tax leaders finds rising investment in technology and skills, growing adoption of hybrid outsourcing, and broader use of AI in tax operations.
Half of the respondents (50%) identified navigating shifting regulations as their most pressing challenge.
Recent developments, such as the OECD’s Pillar Two framework and mandatory digital reporting, are cited as drivers behind compliance workloads and an increase in potential risk.
The report added that operational issues linked to this regulatory environment are also evident with 61% of participants reporting missing deadlines for tax filings, while 50% acknowledging errors in their returns.
These missteps can have repercussions, including audits and strained relationships with authorities.
To address these obstacles, companies are expanding investments in both technologies, upskilling their workforce and making compliance a core aspect of their organisational strategy.
The report notes that nearly two-thirds (66%) expect the cost of compliance to continue rising over the next year as they allocate more funds towards technology upgrades and additional staff.
Hybrid outsourcing—blending in-house and external expertise—is becoming increasingly common. While 62% of businesses plan to enhance training initiatives, 47% are set to boost spending on outsourced services.
The survey added that 70% of respondents have adopted AI tools for knowledge management and data processes, with expectations that these technologies will improve efficiency and accuracy over the next few years.
More than half (51%) of them anticipate reallocating employees to more strategic roles as AI adoption grows.
The use of third-party providers for tax compliance is widespread, with 71% employing external support to supplement internal teams. Flexibility (69%), quality (66%), and the opportunity to focus on strategic activities (48%) were highlighted by chief financial officers as key advantages of outsourcing elements of tax compliance work.
BDO Global Tax head Niek De Haan said: “These findings underscore a fundamental shift, tax compliance is evolving quickly and so are expectations on tax leaders.”
Haan added: “The data shows that 2026 will need to be a year of action for many. What’s encouraging is that businesses are responding proactively, investing to stay ahead.”
