Developments in Personal Income Tax Rates and Thresholds
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Scotland: Implemented income tax reforms, introducing a new “Advanced Rate” band with a 45% rate on income over GBP 75,000 and increasing the top rate to 48%.
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Jamaica: Increased the annual general personal income tax threshold and pension and age relief exemptions, with prorated amounts for 2024.
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Portugal: Government program includes proposals to reduce personal income tax marginal rates by 0.5 to 3 percentage points up to the eighth bracket and introduce a two-thirds reduction for “youth” up to age 25.
Changes to Corporate Income Tax Rates and Incentives
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Portugal: Government program proposes reducing the corporate tax rate by 2 percentage points per year over three years, from 21% to 15%.
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Ecuador: National Assembly approved measures to support the tourism sector, including additional deductions for security expenses, payment facilities, and exemptions from local taxes for tourism investment projects.
- Japan: 2024 tax reform legislation introduces new tax credit incentives for domestic production in strategic sectors and an innovation box regime providing a 30% deduction on qualifying intellectual property income.
Amendments to VAT Registration Thresholds
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Angola: Introduced amendments to its VAT Code, including clarifications for international e-commerce, adjusted VAT rates, and changes to VAT credit thresholds and exclusion regimes.
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Latvia: Proposed Council Implementing Decision authorizing Latvia to increase its VAT registration threshold from EUR 40,000 to EUR 50,000 effective from January 1, 2024, to December 31, 2024.
- Albania-Italy: Albania approved the pending social security agreement, the first of its kind between the two countries.
Enhancements to Tax Compliance and Reporting Requirements
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Singapore: IRAS released new guidance on common industry-specific mistakes and compliance requirements for shipping companies claiming tax exemptions.
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Honduras: Established new Country-by-Country (CbC) reporting rules for MNE groups meeting revenue thresholds, including notification and filing requirements, effective for fiscal years beginning on or after January 1, 2025.
- United States: The IRS issued proposed regulations for the new 1% excise tax on the fair market value of corporate stock repurchases, with reporting requirements starting from the first full quarter after the final regulations are published.
Enhancements to Tax Compliance and Reporting Requirements
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Australia-Romania: Published the synthesized text of the tax treaty as impacted by the BEPS MLI, which applies for taxes withheld at source from January 1, 2024, and for other taxes from October 5, 2023, or January 1, 2024, depending on the country.
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Finland-France: The Finnish parliament approved the new income tax treaty signed on April 4, 2023, which will replace the 1970 tax treaty once in force.
Insights:
This week’s tax policy updates highlight the ongoing efforts by governments worldwide to refine their tax systems, particularly in the areas of VAT, personal income tax, and corporate income tax. The amendments to VAT legislation and registration thresholds in Angola and Latvia demonstrate the importance of adapting to the evolving landscape of international e-commerce and supporting small businesses.
The developments in personal income tax rates and thresholds in Scotland, Jamaica, and Portugal reflect the need to balance revenue generation with providing relief to taxpayers, especially in the context of post-pandemic economic recovery. Similarly, the changes to corporate income tax rates and incentives in Portugal, Ecuador, and Japan underscore the ongoing competition among countries to attract investment and promote growth in strategic sectors.
The progress in international tax treaty developments, such as the Australia-Romania synthesized text and the Finland-France treaty, highlights the continued importance of bilateral agreements in preventing double taxation and facilitating cross-border trade and investment.
Finally, the enhancements to tax compliance and reporting requirements in Singapore, Honduras, and the United States emphasize the growing focus on transparency and the prevention of tax avoidance, particularly concerning multinational enterprises.
As the global tax landscape continues to evolve, businesses and tax professionals must stay informed about these developments and adapt their strategies accordingly to ensure compliance and minimize potential risks.
