The governance reckoning: How tax departments must prepare for the new era of mandatory compliance

2026-06-02 · Source: Thomson Reuters Institute · Field: Legal & Regulatory — Compliance & Risk Management, Regulatory Affairs & Government Relations, Operations & Process Management · Depth: Advanced, short

Summary

Corporate tax compliance is undergoing a significant global transformation, driven by new mandates like Pillar 2, DAC6, and real-time reporting requirements in dozens of jurisdictions. This shift means tax authorities are scrutinizing processes and data quality in real-time, replacing traditional historical audits. A major European manufacturer faced a seven-figure penalty in 2023 for lacking a documented governance framework, despite correct tax returns. The IRS's Large Business & International division has expanded compliance campaigns, and Section 174 of the 2017 Tax Cuts and Jobs Act mandates R&D expenditure amortization. Internationally, OECD's BEPS rules are adopted by over 135 countries, and the EU's VAT in the Digital Age initiative will extend real-time reporting across 27 member states by 2028. Tax departments must now build formal governance frameworks, improve data access, and prioritize data hygiene as a compliance control.

Key takeaway

For tax leaders navigating the evolving global compliance landscape, you must urgently transform your department's operating model. Implement robust governance frameworks, secure timely access to granular financial data, and embed data hygiene as a core compliance control. Failing to establish these foundations now risks significant regulatory penalties, personal liability for senior executives, and severe reputational damage when authorities test your processes.

Key insights

Corporate tax compliance now demands real-time data, robust governance, and demonstrable processes, not just accurate filings.

Principles

• Process defensibility is as critical as tax accuracy.
• Real-time reporting requires data at generation.
• Data quality directly impacts compliance quality.

Method

Tax departments must build formal governance frameworks, proactively engage with other corporate functions to fix data access problems, and treat data hygiene as a critical compliance control.

In practice

• Document ownership for all material filing obligations.
• Establish direct data feeds from source systems.
• Conduct data quality reviews before filing deadlines.

Topics

• Tax Compliance
• Corporate Governance
• Real-time Reporting
• Data Quality
• Pillar 2
• DAC6
• BEPS

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Editorial summary, takeaway, and curation by AIssential. Original article published by Thomson Reuters Institute.