Over the past year, international tax rules have evolved rapidly focusing on the Global Minimum Tax, digital economy taxation, tax transparency, anti-tax avoidance and cross-border information exchange. For cross-border enterprises and high-net-worth individuals, tax planning has shifted from simply exploiting tax disparities between jurisdictions to emphasizing commercial substance, information transparency, compliant filing and global tax burden coordination.
In 2026, the international tax landscape will feature refined regulations, phased implementation across jurisdictions and strengthened cross-border regulatory cooperation. When designing overseas structures, profit distribution, intangible asset arrangements, cross-border financing and tax residency plans, enterprises shall keep a close eye on tax reforms in major economies and abandon outdated strategies relying on low-tax jurisdictions and shell companies.
1. Steady Implementation of the Global Minimum Tax
The Global Minimum Tax (Pillar Two) sets a 15% minimum effective tax rate, primarily applicable to large multinational enterprise groups with consolidated annual revenue exceeding EUR 750 million. Relevant rules are implemented gradually via domestic legislations in participating jurisdictions instead of simultaneous universal enforcement.
For large multinationals, Pillar Two will reshape profit allocation models in low-tax regions. Enterprises need to re-examine effective tax rates, deferred taxes, tax incentives and intra-group profit distribution. Although most small and medium-sized enterprises do not meet the revenue threshold, they shall monitor impacts on clients, investors and parent group structures, and improve data management and tax compliance in advance.
2. Impacts of Updated OECD Model Tax Convention Gradually Emerge
The OECD approved revisions to the Model Tax Convention in 2025, which will be incorporated into future updated versions. The revisions, together with commentaries, influence countries’ interpretations of permanent establishments, cross-border remote work, interest deductions, digital economy and treaty provisions. Note that updates to the model do not automatically amend all bilateral tax treaties. Actual implementation depends on whether contracting states revise treaties or adopt new interpretations in domestic practices.
Enterprises will face stricter reviews on remote work, cross-border team collaboration, intra-group financing, digital services and intangible asset arrangements. It is critical to verify physical business locations, personnel authority, contract signing, income sources, cost allocation and decision-making centers to avoid unintended permanent establishment risks or tax residency disputes.
3. Notable Tax Reforms in the EU and the UK
The EU continues to strengthen anti-avoidance rules, information disclosure and digital economy supervision, while a unified 3% Digital Services Tax at EU level has not been fully rolled out. Currently, digital tax rules in Europe are implemented or discussed separately by individual member states. Enterprises engaged in digital platforms, advertising, online marketplaces and data-related businesses shall verify local rules in target markets one by one.
The UK abolished the long-standing Non-Dom regime on 6 April 2025 and replaced it with the new four-year Foreign Income and Gains (FIG) system, which reforms the traditional remittance basis of taxation. The new rules mainly apply to newly qualified UK tax residents rather than non-UK tax residents. High-net-worth individuals with UK residency, asset holdings or family wealth arrangements shall reassess tax residency, overseas income, inheritance tax and offshore structures.
4. Expanding Tax Transparency & Information Exchange
The Common Reporting Standard (CRS) remains the core framework for automatic exchange of financial account information, and revised CRS rules further enhance reporting requirements. Meanwhile, the Crypto Asset Reporting Framework (CARF) establishes a new international information exchange system for crypto asset transactions, digital wallets and related service providers. The two frameworks serve different purposes and shall not be simply referred to as "CRS 2.0 covering all crypto assets".
Automatic exchange of offshore real estate information has become a new trend in global tax transparency. Multiple jurisdictions have pledged to launch relevant regimes to exchange data on offshore property ownership, values, transactions and gains. High-net-worth individuals holding overseas real estate shall pay attention to compliance issues concerning asset registration, rental income, capital gains and inheritance tax.
5. Coping Strategies for Cross-border Enterprises
To adapt to international tax reforms, enterprises may take three major actions:
Restructure global tax frameworks, phase out shell companies and low-tax arrangements without reasonable commercial purposes, and ensure alignment among personnel, assets, business functions and risk allocation.
Enhance compliance documentation, including transfer pricing contemporaneous files, foreign income declarations, beneficial ownership proofs and tax treaty application materials.
Establish regular dynamic monitoring mechanisms to track policy updates from the OECD, EU, UK, US, Singapore, Hong Kong and major host countries.
The international tax environment in 2026 will continue to prioritize transparency, commercial substance and cross-jurisdictional coordination. Only by proactively adapting to regulatory changes can cross-border entities optimize global tax burdens and capital efficiency while maintaining full compliance.