Advancement of Pillar 2 Global Minimum Tax Implementation
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Liechtenstein: Adopted the Regulation of 26 March 2024 on the minimum taxation of large groups of companies (GloBE Regulation), implementing aspects of the Law of 10 November 2023 on the minimum taxation of large groups of companies (GloBE Act), effective from January 1, 2024.
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New Zealand: Enacted the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill, adopting the OECD’s Pillar 2 GloBE rules with a 15% minimum tax rate for large MNEs and introducing the Income Inclusion Rule, Domestic Income Inclusion Rule, and Under-taxed Profits Rule.
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Thailand: Released draft Top-up Tax Act to implement the GloBE rules under BEPS 2.0 Pillar Two, aligning with the OECD framework.
Enhancements to Transfer Pricing Documentation and CbC Reporting Rules
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Mauritania: The Finance Law for 2024 expanded transfer pricing documentation rules to encompass domestic related party transactions alongside cross-border ones and updated CbC reporting rules to align with OECD minimum standards.
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Trinidad and Tobago: Published the Base Erosion and Profit-Shifting Inclusive Framework (Country-by-Country) Reporting Act, 2024, introducing CbC reporting requirements in line with BEPS Action 13 for MNE groups meeting the annual consolidated revenue threshold of USD 850 million.
Amendments to VAT Registration Thresholds and Rates
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United Kingdom: Increased the VAT registration threshold from GBP 85,000 to GBP 90,000, effective from April 1, 2024, freeing an estimated 28,000 small businesses from paying VAT.
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Sweden: The Ministry of Finance proposed an increase in the VAT exemption/registration threshold from SEK 80,000 to SEK 120,000, to be effective from January 1, 2025.
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Laos: Reverted the standard VAT rate to 10% from the previously reduced 7% rate through Presidential Decree No. 003/PPT of 19 March 2024, effective from the date of signing.
Progress in Bilateral Tax Treaty Negotiations and Ratifications
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Kyrgyzstan-Netherlands: The Kyrgyzstan Cabinet of Ministers approved the ratification of the pending income tax treaty with the Netherlands, the first of its kind between the two countries, which will apply from January 1 of the year following its entry into force.
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France-Moldova: France ratified the pending tax treaty with Moldova through Law No. 2024-246 of 21 March 2024, which will apply from January 1 of the year following the exchange of ratification instruments.
Insights:
The tax policy updates this week reveal a strong momentum towards the global implementation of the OECD’s Pillar 2 global minimum tax rules, as well as a continued emphasis on digitalization and transparency in tax administration. Governments are also focusing on fine-tuning VAT rules to support small businesses and raise revenue in the post-pandemic economy. The progress in bilateral tax treaties highlights the importance of international cooperation in preventing double taxation. As the global tax landscape evolves, businesses must stay informed and adapt their strategies to ensure compliance and minimize risks.
