Global Minimum Tax: From Framework to Implementation
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France: Issues implementing decree detailing GloBE computations, filing requirements, and information exchange procedures. IIR/QDMTT effective December 2023, UTPR December 2024.
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Austria: Amends CFC rules to avoid double taxation with Pillar 2, including QDMTT in ETR calculations and allowing QDMTT credit against CFC income.
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UAE: Finalizing QDMTT legislation for January 2025, introducing tax credits for high-value employment (2025) and R&D activities (2026).
Strategic Tax Relief and Economic Stimulus
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Greece: Enacts comprehensive reforms including 1% social security reduction, 3-year rental income exemption, and enhanced R&D super deductions up to 300% for knowledge-intensive SMEs.
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Seychelles: Removes 15% withholding tax on digital economy technical services and accelerates software amortization to 3 years to boost tech sector.
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Serbia: Increases monthly non-taxable salary amount to RSD 28,423 and extends 65-75% tax exemption for new employees through 2025.
Digital Economy and VAT Evolution
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EU: Agrees on electronic VAT exemption certificate replacing paper system, mandatory for cross-border transactions from 2031.
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Vietnam: Approves new VAT law effective July 2025, doubling exemption threshold to VND 200M and revising zero-rated supply list including digital content.
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Cyprus: Approves Pillar 2 with unique QDMTT delay to 2025, diverging from EU directive’s 2024 start.
Cross-Border Relations and Treaty Developments
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Canada: Suspends tax treaty with Russia effective November 18, 2024, following Russia’s prior partial suspension.
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Azerbaijan: Reduces branch profit tax from 10% to 5% for non-resident parent transfers, effective January 2025.
Sector-Specific Tax Measures
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Dubai: Implements 20% tax on foreign banks (11% effective rate after corporate tax credit), excluding DIFC entities, effective January 2024.
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India: Repeals windfall tax on domestic oil production and fuel exports amid changing market conditions.
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Dubai: Reinstates 30% alcohol tax from January 2025, rejecting expected reduction to 15%.
Insights:
The evolution of Pillar 2 implementation reveals an emerging pattern of sophisticated domestic adaptations, with countries like Austria proactively addressing interaction with existing tax regimes. This suggests a shift from simple adoption to nuanced integration with domestic tax systems.
The trend toward targeted digital economy incentives, exemplified by Seychelles’ tech sector reforms and Vietnam’s comprehensive VAT overhaul, indicates a growing recognition that traditional tax frameworks must evolve to support digital transformation while protecting revenue bases.
The suspension of the Canada-Russia tax treaty and Dubai’s targeted banking sector tax highlight how geopolitical considerations and domestic economic priorities are increasingly shaping tax policy decisions, moving beyond pure revenue considerations.
These developments point to an increasingly complex tax landscape where international standards, domestic priorities, and sectoral considerations intersect in ways that demand more sophisticated approaches to tax policy design and implementation.
