Indirect Tax Keeps (Increasing) Evolving
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Switzerland: Federal Council approves VAT increase for pension funding: standard rate from 8.1% to 8.8%, accommodation rate from 3.8% to 4.2%, reduced rate from 2.6% to 2.8%. Referendum planned for September 2025.
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Slovak Republic: Increases standard VAT rate from 20% to 23%, raises 10% reduced rate to 19%, maintains 5% rate for basic foods and specific services. Effective January 2025.
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Argentina: Eliminates VAT exemption for newspapers, magazines, periodicals, and digital subscriptions.
Pillar 2 Implementation Accelerates
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Portugal: Parliament approves Pillar 2 implementation with IIR/QDMTT from January 2024, UTPR from 2025. Applies to MNE groups with €750M+ annual revenue.
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Jersey: Adopts MCIT ensuring 15% effective rate on Jersey profits and IIR for low-taxed foreign profits, effective January 2025. UTPR not implemented.
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Italy: Issues decree on substance-based income exclusion, incorporating OECD Administrative Guide clarifications.
Corporate Tax Rates Engineering
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Slovak Republic: Increases corporate tax to 24% for income over €5M, reduces rate to 10% (from 15%) for small businesses with income up to €100K.
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Tunisia: Introduces progressive corporate rates: 15% (revenue below TND 5M), 20% (TND 5-20M), 25% (above TND 20M). Special rates: 10% for priority sectors, 35% for major activities, 40% for financial institutions.
Individual Measures
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Jamaica: Implements one-time Reverse Income Tax Credit of JMD 20,000 for individuals earning under JMD 3M in 2023. Expected to benefit 500,000+ taxpayers.
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France: Finance Committee approves “targeted universal tax” for French citizens taking tax residence abroad, applying if foreign tax burden is 50%+ lower than French equivalent.
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Morocco: Draft Finance Law 2025 revises individual tax brackets, increasing exemption threshold from MAD 30,000 to 40,000 and reducing top rate from 38% to 37%.
Insights:
The global tax landscape is experiencing a pivotal shift as Pillar 2 implementation gains momentum, with jurisdictions adopting varied approaches.
The rise of targeted tax measures, such as France’s new universal tax mechanism and Jamaica’s reverse tax credit, suggests a growing sophistication in using tax policy to address specific social and economic objectives. This targeted approach may represent the future of tax policy design, moving away from broad-brush measures.
The wave of VAT reforms, particularly Switzerland’s pension-linked increase, indicates a shift toward using consumption taxes to address structural fiscal challenges. This trend could accelerate as populations age and traditional funding models come under pressure.
The rise of targeted tax measures, such as France’s new universal tax mechanism and Jamaica’s reverse tax credit, suggests a growing sophistication in using tax policy to address specific social and economic objectives.
This targeted approach may represent the future of tax policy design, moving away from broad-brush measures.
