Alvarez & Marsal Analyzes Q1 2026 Income Tax Accounting Developments

Alvarez & Marsal has published a review of key income tax accounting developments for the first quarter of 2026, emphasizing the impact of policy shifts on multinational corporations. The report notes that global tax landscapes are being shaped by policy evolutions alongside traditional technical rules.

The ongoing development of the Pillar Two framework, including the OECD's newly released side-by-side regime, is prompting multinationals to reassess the interplay between U.S. and global minimum tax systems. Additionally, trade policy has re-emerged as a direct driver of tax outcomes, influencing supply chains and effective tax rates.

The adoption of ASU 2023-09 for public companies in Q1 2026 has largely met its objective of providing disaggregated insights into cash tax payments, particularly through enhanced rate reconciliation and jurisdictional cash tax disclosures. However, many companies found the data-gathering process more operationally intensive than anticipated, especially where accounting and tracking systems were not historically aligned.

The OECD's Pillar Two side-by-side (SbS) reform package introduces new considerations for tax accounting. While offering simplification compared to full GloBE calculations, SESH requires robust deferred tax accounting. Companies must ensure the accuracy of their financial reporting information and tax basis data to comply with these new regulations and potentially benefit from safe harbor provisions.