International Tax Treaty Developments
-
Argentina-Hungary: Argentina committed to signing an income tax treaty with Hungary, which would be the first of its kind between the two countries.
-
Switzerland-Serbia: The Swiss Federal Council approved the dispatch for the pending protocol to the 2005 tax treaty with Serbia, which will apply from January 1 of the year following its entry into force.
-
Azerbaijan-Turkey: Azerbaijan ratified the new income tax treaty with Turkey, which will replace the 1994 tax treaty once in force and effective.
- Belarus-Equatorial Guinea: The Belarus Council of the Republic approved the ratification of the pending income tax treaty with Equatorial Guinea, the first of its kind between the two countries.
Amendments to Tax Reporting and Compliance Requirements
-
Albania and Cameroon: Both countries signed the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbC MCAA).
- Australia: The Australian Taxation Office announced changes to Country-by-Country Local file reporting requirements effective from January 1, 2025, aimed at simplifying reporting and increasing efficiency.
- China: New beneficial owner filing requirements were introduced for companies, partnerships, branches of foreign companies, and other specified entities, effective from November 1, 2024.
Changes to Personal Income Tax Rates and Brackets
- Brazil: The government converted Provisional Measure No. 1.206 into law, revising monthly individual income tax brackets and rates effective from February 2024.
- Mongolia: Loss confirmation requirements apply for the 2023 tax year, with tax losses allowed to be carried forward for up to four consecutive years, subject to a 50% utilization cap per year.
Incentives and Relief Measures
-
Austria: The National Council is considering a draft law for the introduction of public Country-by-Country (CbC) reporting as required by Directive (EU) 2021/2101, with reporting thresholds and requirements in line with the Directive.
VAT Relief and Registration Threshold Changes
-
United States: The IRS released final regulations on tax credits for the purchase of qualifying new and previously owned clean vehicles under the Inflation Reduction Act of 2022.
- Belgium: The Chamber of Representatives approved an investment deduction reform, simplifying the system with three deduction types and providing increased rates for certain investments.
- China: The reduced unemployment insurance contribution rate of 1% and the unemployment insurance contribution refund policy have been extended until December 31, 2025, and December 31, 2024, respectively.
Value Added Tax (VAT) Updates
- Turkey: The Revenue Administration clarified that the 1% VAT rate for the supply of certain food products does not apply to food and beverage services provided by businesses such as restaurants and cafes, which are subject to a 10% VAT rate.
- Italy-United Kingdom: Italy confirmed a reciprocity agreement with the UK on VAT refunds, applicable retroactively from January 1, 2021.
- Estonia: The Act for public CbC reporting and partial implementation of Pillar 2 global minimum tax rules was published in the Official Gazette, with the tax authority empowered to publish required information for financial years beginning on or after July 22, 2024.
Insights:
The progress in international tax treaty developments among various countries underscores the importance of bilateral agreements in preventing double taxation and facilitating cross-border trade and investment.
The amendments to tax reporting and compliance requirements in Albania, Cameroon, Australia, and China demonstrate the growing emphasis on transparency and the exchange of information to combat tax avoidance and ensure fair taxation.
Changes to personal income tax rates and brackets in Brazil and loss confirmation requirements in Mongolia reflect the need to adapt tax systems to changing economic circumstances and support taxpayers in the post-pandemic recovery.
The introduction of incentives and relief measures in the United States, Belgium, and China emphasizes the role of tax policy in promoting sustainable practices, encouraging investment, and supporting businesses and employees during challenging times.
Finally, the VAT updates in Turkey, Italy, the United Kingdom, and Estonia illustrate the ongoing efforts by governments to clarify the application of VAT rates, facilitate cross-border transactions, and align with international reporting standards.
As the global tax landscape continues to evolve, businesses and tax professionals must stay informed about these developments and adapt their strategies accordingly to ensure compliance and optimize their tax positions in an increasingly complex and interconnected world.
