Global Minimum Tax Implementation Accelerates
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Gibraltar: Confirmed increase in corporate tax rate from 12.5% to 15%, aligning with OECD minimum rate. Plans to introduce qualifying domestic top-up tax by end of 2024 and income inclusion rule in 2025.
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Italy: Published implementing decree for Qualified Domestic Minimum Top-up Tax (QDMTT), effective for financial years starting from 31 December 2023.
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Australia: Introduced legislation for Pillar 2 global minimum tax, including Domestic Minimum Tax (DMT), Income Inclusion Rule (IIR), and Undertaxed Profits Rule (UTPR).
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OECD: Launched public consultation on Draft User Guide for the GloBE Information Return XML Schema to standardize reporting.
Innovative Tax Incentives for Economic Growth
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South Korea: Planning to introduce 5% tax credit for companies increasing dividends, and reduce individual dividend tax rates.
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Hong Kong: Introduced patent box regime with 5% concessionary tax rate for qualifying IP income, effective from assessment year 2023/24.
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Italy: Implemented increased deduction (120-130%) for newly hired personnel with permanent contracts in 2024 fiscal year.
Digital Economy Taxation Developments
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Canada: Brought 3% Digital Services Tax into force, applicable to in-scope Canadian digital services revenue exceeding CAD 20 million annually.
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Ecuador: Regulated 15% single income tax on sports betting operators, including registration requirements for non-resident operators
Personal Income Tax Reforms
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Malta: Introduced 7.5% flat tax on gross income from sports activities, applicable from assessment year 2025.
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Oman: Shura Council approved draft personal income tax law, proposing taxation of foreign nationals’ Omani income exceeding USD 100,000 and residents’ worldwide income over USD 1 million.
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Russia: Approved progressive personal income tax rates ranging from 13% to 22%, effective from 1 January 2025.
VAT and Indirect Tax Changes
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Luxembourg: Considering bill to increase VAT exemption threshold for small businesses from EUR 35,000 to EUR 50,000, effective 1 January 2025.
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Romania: Approved new pre-filled VAT return requirements (RO e-VAT returns) from 1 August 2024 for operations from 1 July 2024.
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Portugal: Approved tax program including introduction of VAT group regime from 2025 and increased turnover threshold for cash VAT regime.
Insights:
- The accelerated implementation of the Global Minimum Tax across various jurisdictions signals a rapid shift in the international tax landscape. The introduction of safeguards against circumvention (e.g., Denmark) suggests that tax authorities are anticipating potential avoidance strategies, which may lead to more complex compliance requirements for multinational enterprises.
- Denmark’s pioneering livestock emissions tax represents a significant development in environmental taxation, potentially setting a precedent for other countries. This could lead to increased costs for the agricultural sector and may influence global food prices and trade patterns.
- The flexible implementation date of Canada’s Digital Services Tax, contingent on OECD Pillar 1 progress, highlights the delicate balance countries are striking between domestic revenue needs and international cooperation. This approach may be adopted by other countries, creating a complex, evolving landscape for digital businesses.
- The shift towards actual return-based taxation for investment income in the Netherlands and the innovation box regime in Japan demonstrate a trend towards more targeted, economically efficient tax policies. These changes could influence investment behaviors and R&D activities, potentially reshaping competitive landscapes in these countries.
