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Opportunity amid uncertainty: Optimism must drive action
Most tax leaders (74%) say they’re either mostly or very confident in their ability to navigate their strategic role — perhaps bolstered by the prospect of greater stability in the US tax landscape. With the president promising a tax bill by summer’s end, there’s cautious optimism. But that confidence could be tested if conditions shift again.
The economic stakes remain high as global tax policy and trade dynamics continue to change. Nearly half (46%) of tax executives in our May 2025 Pulse Survey cite complex cross-border tax issues as a top-3 barrier to delivering on their tax strategy, making it the most frequently cited challenge. While US tax changes may be resolved soon, tariff uncertainty remains. Global tax controversy is increasing as aggressive tax audits become the norm in jurisdictions around the world. That means tax leaders must balance confidence with realism, staying focused on how policy and political developments evolve beyond the first 100 days.
Global tax shifts squeeze margins, stifle strategic planning
Uncertainty surrounding the US stance on Pillar Two, trade policy and global tax disagreements still loom with organization-wide effects. These forces can erode margins and make it harder to align tax strategy with business goals: 77% of tax leaders say margin pressure on earnings is a moderate or serious risk to their company.
Such multinational challenges help explain why 46% of tax leaders rank cross-border tax issues among the top 3 barriers to delivering on their tax strategy. While the US Treasury pushes back on elements of Pillar Two, tax leaders are preparing for exposure to the Undertaxed Profits Rule (UTPR) in jurisdictions where their effective tax rate may fall below the 15% minimum. At the same time, Section 899 proposed in the House-passed reconciliation bill introduces new complexity, especially for companies that have joint ventures with non-US entities.
On the trade front, tariff policy is subject to rapid change, shifts that directly impact sourcing, entity alignment and transfer pricing. These decisions are outside the tax leader’s control but still within their sphere of influence. Seventy-seven percent of tax leaders say tariff policies pose a moderate or serious risk to their company. Policy changes demand fast action, but many tax leaders say their organizations aren’t fully equipped to keep up. One third (34%) cite the lack of a cohesive data strategy and 30% point to challenges in applying AI effectively as a top-3 barrier to executing strategy. The message is clear: The time to prepare is now.
R&D expensing: A call for cash flow and competitiveness
We asked tax leaders the extent to which specific tax policy changes — excluding the US corporate tax rate — would affect their companies. R&D expensing ranks highest, with 79% saying it would somewhat or significantly affect their company. Nearly half (47%) said maintaining competitive international tax rules would significantly affect their company. This highlights a broader concern: while after-tax cash flow is critical, what matters most is whether companies can succeed in the global economy.
The way R&D and international operations are treated under current US tax law impacts more than just liquidity. It shapes companies’ strategic positioning and their ability to compete globally, especially in light of Pillar Two, foreign tax incentives and evolving trade rules. In today’s environment, well-designed R&D and international tax policies aren’t just good tax policy, they are a critical part of a strong economic strategy.
Under the Tax Cuts and Jobs Act (TCJA), businesses lost the ability to deduct R&D costs in the year they are incurred. Since Section 174 amortization took effect in 2022, many businesses have had to spread their R&D deductions over several years, limiting cash flow for innovation, hiring and growth. Input from the business community likely helped shape the House-passed FY25 tax bill, which would restore expensing of domestic R&D funding by US companies. However, foreign R&D funding by US companies would remain subject to 15-year amortization. Senate action is underway, and many (especially in the pharma and tech sectors) are hoping for more favorable terms.
What you can do
- Get ahead of change with modeling. Use data-driven scenario modeling to assess how proposed tax policies could affect your business, before decisions are locked in. Identifying high-impact outcomes early allows you to set priorities, engage internal stakeholders and prepare a flexible response plan that aligns with your broader strategy.
- Make tax part of your growth engine. Tax shouldn’t be an afterthought. Work with supply chain, pricing and treasury teams to embed tax into margin planning and other operational decisions. This integrated approach can help you manage risk, uncover hidden value and ensure tax strategy supports your company’s growth.
- Shape the rules, don’t just follow them. Stay actively engaged in policy advocacy, both in the US and internationally. By maintaining an open dialogue with policymakers and industry groups, you can position your company to adapt more quickly and avoid surprises.
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Executive takes on 100 days in: What’s next for business
About the survey
Our latest PwC Pulse Survey, fielded May 1 to May 8, 2025, surveyed 678 executives and board members from Fortune 1000 and private companies about the current business environment, the risks executives are facing and their company’s strategic plans and priorities. Of the respondent pool, 70 were tax leaders.
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