Global Minimum Tax Implementation Advances
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Brazil: Introduces Additional Social Contribution on Net Profit as Pillar 2 top-up tax. Rate: 15% minus effective tax rate of Brazilian entities in MNE groups with €750M+ annual revenue. Effective: January 1, 2025.
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Norway: National Budget 2025 includes Pillar 2 UTPR and associated safe harbor, complementing existing IIR and domestic minimum top-up tax.
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Singapore: Launches consultation on Pillar 2 regulations, focusing on GloBE Safe Harbors and transition rules. Deadline: October 18, 2024.
EU Tax Compliance and Harmonization Efforts
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European Commission: Opens infringement procedure against Hungary, calling for abolition of retail tax regime due to noncompliance with freedom of establishment. Hungary committed to phase out the tax in its Recovery and Resilience Plan.
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Norway-EU: Sign new VAT agreement enhancing administrative cooperation to combat international VAT fraud, expanding on 2018 agreement.
Digital Transformation of Tax Administration
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Serbia: Plans to mandate e-delivery notes for B2B and B2G transactions from October 1, 2027. Applies to public and private entities, with fines ranging from RSD 50,000 to 2 million for non-compliance.
Personal Income Tax and Social Security Reforms
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Russia: Introduces new progressive tax rates for salary income (13% to 22%) and flat rates for other income (13%/15%) from January 1, 2025.
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Argentina: Sets new monthly social security contribution bases: minimum ARS 82,287.12, maximum ARS 2,674,292.72, effective October 2024.
Corporate Tax Incentives and International Agreements
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Uruguay: Expands qualifying activities for shared services centers, offering 90% corporate tax exemption. Extends incentives by 5 years if 120+ new jobs created.
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Argentina: Chamber of Deputies approves BEPS MLI ratification. Will apply to covered tax treaties after ratification instrument deposit.
Insights:
The global tax landscape is rapidly converging on a new equilibrium, with Pillar 2 implementation gaining momentum across diverse economies. Brazil’s innovative approach of leveraging existing tax structures for QDMTT highlights the creative adaptations emerging in response to global standards. This trend suggests we’re entering an era of ‘glocalization’ in tax policy, where global norms are increasingly filtered through local tax systems.
The EU’s ongoing struggle with member state compliance, exemplified by the Hungary retail tax case, underscores the tension between national fiscal sovereignty and EU-wide harmonization. This friction is likely to intensify as the bloc pursues deeper economic integration, potentially catalyzing a reimagining of the EU’s tax governance structure.
Serbia’s move towards mandated e-delivery notes signals the next frontier in tax digitalization: real-time transaction monitoring. This shift could fundamentally alter the dynamics of tax compliance and enforcement, moving from periodic reporting to continuous, AI-driven oversight.
As countries continue to fine-tune their corporate tax incentives and international agreements, we’re witnessing the emergence of a new paradigm in global tax competition. The focus is shifting from simple rate reductions to more sophisticated, targeted incentives tied to specific economic outcomes, as seen in Uruguay’s shared services center regime. This evolution suggests a future where tax policy becomes an increasingly precise tool for economic engineering.
