Countries Progress Implementation of Global Minimum Tax
- Malta published a Legal Notice partially transposing the Pillar Two Directive, including definitions and reporting rules but deferring main IIR and UTPR rules. Deferral allowed for a maximum of six fiscal years from 31 Dec 2023—local filing requirements mandated unless filed by an ultimate parent or designated filing entity in another qualifying EU jurisdiction.
- Senegal requires CbC reports to be submitted electronically using specified forms, with content/format aligned with OECD standards.
- Bahamas announced Pillar Two qualified domestic minimum top-up tax (QDMTT) will be introduced with a 15% rate on large MNE groups. Draft legislation is expected by May 2024, with an estimated $140 million in additional annual revenue.
- Greece is consulting on legislation for the Pillar Two Global Minimum Tax, aiming for a 15% minimum tax level for multinational enterprise (MNE) groups.
VAT and Service Tax Adjustments
- Ecuador is increasing its VAT rate from 12% to 13% starting April 2024, with a potential further increase to 15%, to strengthen security amid rising violence.
- Malaysia is raising its service tax rate from 6% to 8% for foreign digital service providers, effective March 1, 2024.
International Agreements and Cooperation
- The Czech Republic and Malta are set to sign a new income tax treaty, replacing the one from 1996.
- India and Mauritius plan to sign a tax treaty protocol, showcasing efforts to update international tax agreements for mutual benefit.
Domestic Tax Reforms
- Switzerland is adopting a dispatch on individual taxation reform to transition from joint to individual taxation, addressing the “marriage penalty” and incentivizing employment.
- India’s Finance Act 2024 includes limited tax measures such as exemptions and extensions to support financial services, startups, and international investment.
Tax Transparency and Exchange of Information
- Singapore updated its CbC report exchange relationships to include Papua New Guinea, enhancing tax transparency.
- The OECD Global Forum launched a Model Manual for CRS Compliance Audits, supporting jurisdictions in developing and implementing their administrative compliance strategies.
Insights:
As countries continue implementing global minimum tax rules, we also see counterbalancing measures like incentives and tax benefits maintained or expanded. This indicates a delicate balance tax authorities must strike between collecting revenue and encouraging investment. Heightened information exchange facilitates enforcement, but may risk capital flight without corresponding benefits.
