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The Future of Tax Management: Embracing AI

As global tax environments become increasingly complex, a recent survey by EY sheds light on how tax leaders are adapting to new risks through the strategic use of artificial intelligence (AI) and a renewed focus on governance frameworks. With 90% of tax leaders anticipating a surge in tax disputes over the next few years, the quest for innovative solutions has become more urgent than ever.

The survey, which compiled insights from about 2,000 senior tax executives worldwide, illustrates the challenges arising from global tax reforms, heightened demands for transparency, the introduction of new technologies, and rapidly evolving regulations. Central to the findings is the recognition of generative AI as an innovative tool in managing tax risks and resolving disputes.

Generative AI’s Transformative Impact on Tax Risk Management

Generative AI is rapidly emerging as a crucial component in tax risk management. In fact, 87% of survey respondents expressed confidence that AI would enhance efficiency and accuracy in managing tax audits and resolving disputes. However, new challenges arise almost daily, complicating both the number of disputes and the time required for resolution.

Interestingly, 70% of the tax leaders have already adopted or are in the process of integrating at least one generative AI tool specifically designed for dispute management. Among those utilizing AI tools, satisfaction with their tax dispute management approaches is significantly higher—46% of AI users reported being 'very satisfied,' compared to only 31% of non-users.

Luis Coronado, EY’s Global Tax Controversy Leader, noted that “AI is transforming not only how tax teams work but also how they build and strengthen their relationships with tax authorities. The shift from post-event responses to real-time engagement fosters a movement from interpretation to collaboration, leading to greater accuracy, transparency, and efficiency.”

Preparing for Increased Disputes Amid Technological Advancements

Despite the optimism surrounding technological advancements, the potential for disputes continues to loom large. A substantial 92% of executives surveyed expect an increase in disputes stemming from the OECD's Base Erosion and Profit Shifting (BEPS) Pillar 2. Additionally, 91% expressed concern over unresolved issues regarding Pillar 1 Amount A. Moreover, 90% anticipated a rise in tax disputes tied to transparency obligations, such as transfer pricing and country-by-country reporting (PcBCR).

The emerging digital services tax is also expected to contribute significantly to future tax risks, but only 49% of respondents felt sufficiently prepared for the anticipated surge in disputes.

Coronado further emphasized, “Tax disputes are evolving. With new rules, reporting obligations, and transparency requirements, the number of disputes is almost certainly expected to rise. Companies that invest early in technology and talent will be well-positioned to respond effectively to this growing wave of tax disputes.”

Building Confidence Through Enhanced Tax Governance

As tax risks mount, a robust governance framework is becoming foundational to effective dispute management. While 91% of respondents plan to strengthen their focus on global tax governance, only 31% reported being 'very satisfied' with their current dispute management practices.

Bridging the gap between intention and execution is crucial. Progressive tax departments are enhancing their strategies by establishing clear leadership structures, centralizing oversight of global disputes, and reinforcing data governance practices.

Joel Cooper, EY’s Global International Tax and Transactions Services Controversy Leader, stated, “In today’s environment, governance is not just about compliance; it provides a strategic advantage. Companies that effectively combine clear governance with cutting-edge technology, top-notch talent, and strong data strategies will manage tax disputes from a position of confidence rather than crisis.”

Taichi Haraguchi, EY Japan’s Tax Policy and Controversy Leader, also highlighted, “There’s no doubt that AI is enhancing efficiency and accuracy in tax risk management. Japanese tax authorities are actively promoting a digital transformation in tax administration to improve tax handling. However, given the complexities of our economic society, it's essential that AI delivers precise outcomes, and rigorous assessment and validation remain paramount.”

For detailed insights from this report, please visit: 2025 EY Tax Risk and Controversy Survey (link to be specified).

This article presents a translation of EY’s official news release from December 11, 2025. In the event of discrepancies between this translation and the original English text, the original document shall prevail.