Tax Treaty Developments and Increasing Adoption of MLI Standards
Countries are proactively aligning with international standards to combat tax evasion and ensure fair tax practices, as evidenced by the global adoption of the BEPS Multilateral Instrument (MLI):
- Azerbaijan signed the BEPS MLI, planning to cover 54 of its tax treaties.
- Spain, Norway, and Mauritius published synthesised texts of their treaties, incorporating changes from the BEPS MLI.
- Rwanda’s Chamber of Deputies ratified the first income tax treaty with South Korea.
- Chile’s Senate approved the protocol to the 2001 tax treaty with Brazil.
Digitization and Modernization of Tax Systems
A global shift towards digital tax systems is evident, aimed at increasing efficiency and compliance, as countries embrace technology to streamline tax processes and enhance transparency:
- Taiwan is incentivizing enterprises to upload complete electronic account books.
- Malaysia updated its e-invoicing guidelines.
- Kenya implemented electronic invoice requirements.
- Saudi Arabia announced criteria for the ninth wave of the integration phase of its new E-Invoicing requirements.
Global Collaboration on Tax Matters
Enhanced international cooperation and knowledge sharing, focusing on transparency and tackling tax evasion, are becoming increasingly prominent. Moreover, jurisdictions are preparing for the implementation of global minimum tax rules:
- Fiji joined the Global Forum on Transparency and Exchange of Information for Tax Purposes.
- The Platform for Collaboration on Tax, an initiative by the IMF, OECD, UN, & WB, released its 2023 Progress Report.
- Bermuda launched a public consultation on a new CIT regime for MNEs in response to the OECD’s Pillar 2 rules.
- UAE introduced amendment to its CT law, paving the way for introduction of Pillar 2 rules.
Sector-Specific Tax Regimes and Incentives
Tailoring tax policies to support specific industries and encourage investment in key sectors is a growing trend, as seen in the focus on niche and emerging sectors in taxation:
- Hong Kong enhanced its aircraft leasing tax regime.
- Egypt introduced a simplified tax regime for startups.
Reforms in Domestic Tax Policies and Rates
Countries are reforming their tax systems and adjusting rates to address economic challenges and align with international norms:
- The Czech Republic approved tax and budget reforms for 2024.
- Mexico increased its withholding tax rate on financial interest for fiscal year 2024.
- The United States announced the maintenance of unchanged tax interest rates for Q1 2024.
Enhanced Focus on Tax Compliance and Reporting
Strengthening tax compliance through new reporting requirements and enforcement measures is a significant trend, as jurisdictions aim to enhance transparency and compliance in their tax systems:
- Canada’s 2023 tax year marks the first application of new reporting requirements for certain express trusts.
- Sweden implemented new reporting obligations for payment service providers.
- Taiwan issued a notice on the payment of assessed provisional enterprise income tax.
Adjustments in Response to Economic and Geopolitical Challenges
Tax policy adjustments in response to economic crises, geopolitical tensions, and changing global landscapes are increasingly common:
- The European Union extended parts of the State aid Temporary Crisis and Transition Framework.
- Denmark confirmed the termination of its 1996 tax treaty with Russia.
