Between 2024 and 2026, the global tax system experienced one of the most significant
transformations in modern history. The OECD/G20 Pillar Two framework, which introduces
a 15% Global Minimum Tax, has now been adopted and implemented in more than 40 major
jurisdictions worldwide.

Taxation: The Pillar Two Era and India’s Overhaul

Pillar Two Implementation (2024–2026)

By January 2026, 147 jurisdictions agreed to a final “Side-by-Side” administrative framework.
Large multinational corporations with global revenues exceeding €750 million have started
filing their first GloBE Information Returns (GIR), and the first tax payments under this
regime are expected by mid-2026.

India’s Income Tax Act, 2025

Coming into force on April 1, 2026, this law replaces the 60-year-old Income-tax Act of 1961.
The new Act simplifies outdated terminology, replaces the concept of an “Assessment Year”
with a unified “Tax Year,” and introduces clear provisions for the taxation of Virtual Digital
Assets (VDAs).

• Key Change: The previous distinction between “Assessment Year” and “Previous Year” has been removed and replaced with a single Tax Year (April 1 – March 31).
• Simplified Compliance: TDS provisions are now consolidated into single sections such as Section 393, and the law introduces definitions related to Virtual Digital Space to improve taxation of digital assets and crypto transactions.

Regulatory & Compliance: AI and Cyber-Resilience

Regulatory focus across the world has shifted toward building trust, accountability, and
transparency, particularly in areas related to artificial intelligence and emerging technologies.

The AI Compliance Wave EU AI Act (2024–2026)

Starting August 2026, companies operating High-Risk AI Systems in the European Union
must comply fully with the regulation. Businesses will need to provide detailed technical
documentation, ensure human supervision of AI systems, and clearly label AI-generated content.

• High-Risk Systems: AI systems used in recruitment, credit scoring, and critical infrastructure must undergo conformity assessments and maintain complete technical documentation.
• Transparency: AI-generated content, including deepfakes and synthetic text, must be clearly labeled. A Digital Omnibus proposal in 2026 may extend compliance deadlines for certain existing synthetic content until February 2027, but all new AI systems must comply by August 2026.

Digital Product Passport

New EU regulations now require many digital products to include a Digital Product Passport,
providing information about their origin, materials used, and environmental impact.

Cyber Security & ESG NIS2 & Cyber Resilience Act

Beginning September 2026, manufacturers of digital products must report actively exploited
security vulnerabilities within 24 hours to regulators.

Green Claims Directive (2026)

Companies are now legally restricted from using terms such as “carbon neutral” or
“eco-friendly” unless the claims are supported by credible, third-party verified scientific evidence.

Industrial Policy: Green Transition & Economic Security

China’s 15th Five-Year Plan (2026–2030)

Finalized in March 2026, China’s latest development plan prioritizes economic security and
domestic industrial strength, particularly in areas such as AI chip production and green energy
storage technologies.

Carbon Border Adjustment Mechanism (CBAM)

From January 1, 2026, the European Union’s CBAM entered its full operational phase.
Importers of carbon-intensive goods such as steel, cement, and aluminium must now purchase
carbon certificates to cover the difference between their country’s carbon price and the EU
Emissions Trading System (ETS) price.

CBAM Definitive Phase (2026)

As of January 1, 2026, CBAM moved from a reporting phase to an active taxation mechanism.
Importers of steel, cement, and electricity must purchase carbon certificates based on emissions levels.

Global “Green” Spending

OECD data indicates that industrial policy spending reached around 1.55% of GDP by 2025,
with nearly 80% of green funding delivered through direct grants rather than tax incentives.

Legal Updates & Enforcement Matters

ViDA (VAT in the Digital Age)

The European Union’s ViDA initiative has introduced mandatory real-time digital reporting
for cross-border B2B transactions, gradually replacing traditional paper-based VAT reporting systems.

Adopted in March 2025, the EU is currently conducting a Gap Analysis phase. While real-time
digital reporting for cross-border B2B transactions is scheduled for 2030, businesses must begin
ERP upgrades and e-invoicing preparation during 2026.

Beneficial Ownership Clarity

In the United States, the FinCEN Beneficial Ownership Information (BOI) database is now fully
operational for foreign entities. The system aims to prevent money laundering and the misuse
of shell companies.

Supply Chain Enforcement

Enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) intensified in 2025, expanding
beyond the textile sector to include critical minerals and automotive components.

Faceless Assessments

Both India and several EU countries are adopting fully automated tax assessments to reduce
corruption and improve efficiency.

Crypto-Asset Reporting

Under the Crypto-Asset Reporting Framework (CARF), 2026 marks the first year of comprehensive
information exchange between tax authorities regarding digital asset ownership.

Beneficial Ownership

In both the U.S. and EU, 2026 represents a critical deadline for entities to disclose their
ultimate beneficial owners (UBOs) to prevent financial crime and money laundering.

Conclusion

The years 2024 to 2026 have marked a decisive shift from policy planning to strict enforcement
in global taxation and regulatory frameworks. By March 2026, organizations are operating in
a legal environment that is highly digitalized, transparent, and intervention-driven.