Global Minimum Tax and International Tax Cooperation
- G20 Finance Ministers issued a declaration reaffirming commitment to the Two-Pillar Solution, urging finalization of Pillar One negotiations.
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Cyprus consented to all Pillar 2 safe harbors and administrative guidance issued by the BEPS Inclusive Framework.
- UK HMRC published draft legislation to implement the transitional Country-by-Country reporting safe harbour anti-arbitrage rule.
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Vietnam‘s draft Corporate Income Tax Law includes provisions for Pillar 2 UTPR and STTR implementation.
Emerging Trends in Energy and Environmental Taxation
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Greece introduced a 33% temporary solidarity contribution on excess profits of energy and mining companies for the 2023 tax year.
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The Netherlands enacted a temporary tax on excess income of electricity producers, applying retroactively from December 1, 2022, to June 30, 2023.
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Ukraine‘s Ministry of Finance proposed an increase in the military tax, including new rates for various sectors and transactions.
Digital Economy and E-Invoicing Developments
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Oman postponed the launch of mandatory B2B e-invoicing to 2025 due to technical challenges.
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Malaysia confirmed the implementation timeline for its B2B e-invoicing system, starting from August 1, 2024, for large taxpayers.
Tax Incentives and Economic Zones
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Cambodia introduced incentives for MSMEs transitioning from the informal economy, including tax exemptions and reduced compliance requirements.
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Trinidad and Tobago fully proclaimed the Special Economic Zones Act 2022, enabling the designation of various types of SEZs.
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Thailand approved incentives for Thai nationals returning to work in the country, including a reduced top individual income tax rate of 17%.
Domestic Tax Reforms
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India‘s Finance Bill 2024 proposed significant changes, including reduction in foreign company tax rate, rationalization of capital gains tax, and removal of the “Angel Tax”.
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Rwanda adopted a new tax on minerals, including both a mining royalty tax and a minerals export tax.
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Uganda enacted various amendments to tax laws for 2024-2025, including expansion of tax-exempt income and new withholding tax provisions.
Insights:
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The G20 declaration on international tax cooperation highlights the ongoing challenges in implementing the Two-Pillar Solution, particularly Pillar One. The emphasis on finalizing negotiations “as soon as possible” suggests growing pressure to reach a consensus, potentially driven by the threat of unilateral digital services taxes.
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The trend towards energy and environmental taxation, as seen in Greece and the Netherlands, reflects a growing focus on capturing windfall profits in the energy sector and aligning tax policies with climate objectives. This trend may spread to other countries seeking to balance fiscal needs with environmental goals.
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The continued development of e-invoicing systems, despite some implementation delays, indicates a global shift towards digitalization of tax administration. Malaysia’s phased approach based on company size could serve as a model for other countries considering similar systems.
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The introduction of tax incentives for informal economy transition (Cambodia) and talent attraction (Thailand) demonstrates how countries are using targeted tax policies to address specific economic challenges. These approaches could be particularly relevant for developing economies seeking to broaden their tax base and attract skilled workers.
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India’s comprehensive tax reform proposals, including the rationalization of capital gains tax and removal of the “Angel Tax”, signal a move towards simplifying the tax system and encouraging investment. This could potentially influence tax policy trends in other emerging economies.
