Strategic Semiconductor Policy
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South Korea: Boosts semiconductor tax credits: 20% for large companies, 30% for SMEs. Extends national strategic technology credits to 2029, semiconductor investments to 2031. Expands scope to include AI and future transportation.
Small Business Tax Simplification
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Egypt: Introduces turnover-based taxation for businesses under EGP 20M: rates from 0.4% to 1.5% tiered by revenue. Exempts qualifying entities from capital gains tax, dividend withholding, and advance payments for 5+ years.
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France: Delays simplified VAT threshold implementation to June 2025, introducing single €25,000 threshold replacing separate goods/services thresholds.
Tax Amnesty and Voluntary Compliance
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Egypt: Grants tax amnesty for new registrants, waiving pre-February 2025 obligations. Offers penalty relief for unfiled returns since 2020 and settlement options at 30-40% of tax due for estimated-basis examinations.
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Hong Kong: Approves one-off 100% reduction of profits/salaries tax for 2024/25, capped at HK$1,500 per case, benefiting 2.14M taxpayers and 165,400 businesses.
Trade Tariff Escalation
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US-China: US increases tariffs on Chinese products from 10% to 20%; China retaliates with 10-15% tariffs on agricultural products including soybeans, pork, and dairy.
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UK: Launches consultation on oil/gas pricing mechanism to replace Energy Profits Levy, proposing revenue-based and profit-based models.
VAT Rate Adjustments
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Bahamas: Reduces VAT on unprepared food from 10% to 5% from April 2025, applicable to grocery stores but not restaurants.
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Spain: Applies 4% super-reduced VAT rate to all bread types including gluten-free varieties following Supreme Court ruling.
Insights:
This week’s developments reveal an emerging pattern of sophisticated semiconductor policy, with South Korea’s enhanced tax credit framework demonstrating how targeted fiscal incentives can be calibrated to support national technological sovereignty.
The contrasting approaches to small business taxation between Egypt’s comprehensive turnover-based system and France’s threshold simplification highlight a global trend toward reducing compliance burdens while maintaining revenue integrity.
The synchronicity of US-China tariff escalations, despite their economic ramifications, signals a shift from tax policy as purely economic tool to its increasing use as geopolitical leverage in international relations.
These trends collectively point to an evolving tax landscape where policies increasingly serve multiple objectives simultaneously – from industrial strategy to social welfare to diplomatic leverage – requiring unprecedented coordination between fiscal, economic, and foreign policy.
