Tax Incentives and Economic Zones
- Oman: Launched Incentive Program for the Capital Market, offering tax reductions and other benefits for companies listing on the Muscat Stock Exchange.
- Venezuela: Introduced one-year income tax exemption for cooperative associations, effective August 12, 2024.
Global Implementation of Pillar 2 and Public CbC Reporting
- Italy: Approved legislative decree for public Country-by-Country (CbC) reporting requirements as per Directive (EU) 2021/2101, applicable from financial years starting on or after June 22, 2024.
- Germany: Published draft law to amend the Minimum Tax Law, implementing BEPS Inclusive Framework administrative guidelines on CbC Safe Harbor and other matters.
VAT Reforms and Digital Economy Taxation
- Italy: Approved implementation of EU small business scheme for cross-border supplies, allowing VAT exemption for businesses with annual turnover under €85,000 in Italy and €100,000 in the EU, effective January 1, 2025.
- Switzerland: Approved changes to VAT Ordinance for new digital platform requirements and annual returns for small taxpayers, effective January 1, 2025.
- Azerbaijan: Introduced VAT registration for non-residents engaged in e-commerce, with optional registration through a new portal.
Corporate and International Taxation Developments
- India: Enacted Finance (No. 2) Act 2024, including reduction of corporate income tax rate for foreign companies to 35%, changes to capital gains taxation, and abolition of “Angel Tax”.
- Switzerland: Extended withholding tax exemption on “too-big-to-fail” instruments to December 31, 2031.
- Mauritius: Enacted 2024-2025 Budget measures, including new 2% Corporate Climate Responsibility levy on profits for companies with turnover over MUR 50 million.
Future Tax System Planning
- New Zealand: Inland Revenue launched public consultation on the broad structure of the future tax system, exploring potential changes to tax bases, income tax regimes, and consumption tax regimes.
Insights:
- VAT reforms, particularly in relation to digital platforms and small businesses, indicate a trend towards modernizing tax systems to better capture economic activity in the digital age while also simplifying compliance for smaller entities. The EU small business scheme implemented by Italy could serve as a model for other countries looking to streamline cross-border VAT compliance.
- Corporate tax reforms, such as India’s reduction of the foreign company tax rate and changes to capital gains taxation, reflect efforts to balance attracting foreign investment with ensuring a fair tax contribution. Mauritius’ introduction of a Climate Responsibility levy signals a growing trend of integrating environmental considerations into corporate taxation.
- The introduction of targeted tax incentives, as seen in Oman’s capital market program and Venezuela’s cooperative association exemption, demonstrates how countries are using tax policy to stimulate specific sectors or forms of economic organization.
- New Zealand’s consultation on the future structure of its tax system is noteworthy, as it represents a proactive approach to addressing long-term fiscal challenges. This could potentially influence similar reviews in other countries facing demographic and economic shifts.
