The OECD has reached an agreement on its far-reaching corporate tax reform plans, following productive discussions with some of the hold-out countries which remained against the proposals; at the time of writing, Kenya, Nigeria, Pakistan and Sri Lanka remain opposed, whilst Ireland, Estonia and Hungary have agreed to sign up to the plans, subject to certain conditions.
As a result, sufficient international agreement has now been reached to go ahead with a new global minimum corporate tax rate of 15 percent, which will be introduced for large multinational enterprises (MNEs) from 2023, and represents Pillar Two of the Agreement.
Supported by 136 countries and jurisdictions representing more than 90 percent of global GDP, the agreement will also bring in new tax rules to reallocate to market jurisdictions taxing rights on profits earned by the world’s 100 largest and most profitable MNEs, representing … Read More »
Puerto Rico’s Governor, Pedro Pierluisi, explained that the authorities are studying a potential reduction to the corporate income tax rate.
Writing on Twitter, Pierluisi said that the Government had tasked a panel to study tax reform options to lower the burden for all businesses across all sectors of the economy and introduce a simpler system.
In comments published by the El Vocero newspaper, he further suggested that Puerto Rico would target a corporate tax rate below the 28 percent federal rate US President Joe Biden plans to introduce, down from the current rate for businesses in Puerto Rico of 37.5 percent.
For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look
The Indian Government has announced that it will be walking back the unpopular retroactive tax provisions introduced to the tax code as part of a tax dispute with telecoms giant, Vodafone.
The dispute involving Vodafone related to the UK firm’s acquisition of Hutchison Essar and the Indian Government’s claims that the transaction should be subject to capital gains tax. Vodafone has consistently maintained that it is not liable for a USD2.2bn bill in back taxes and penalties relating to the deal.
In January 2012, the Indian Supreme Court ruled in favor of Vodafone stating that transfers of non-resident companies made by non-residents should not attract Indian capital gains tax. The Government at the time, however, defied the ruling by amending Section 9 of the Income Tax Act 1961 with retroactive effect from 1961, the year in which India’s current income tax legislation … Read More »
The headline development this week has been the support voiced by finance ministers from the G7 countries for the US-backed global minimum corporate tax proposals that have been under discussion recently.
Meeting on June 5, the G7 finance ministers agreed that the new international tax architecture being discussed to resolve the tax challenges of the digitalized economy should include a minimum corporate tax burden for multinationals of no less than 15 percent.
During two-day talks in London, the finance ministers from the United States, Japan, Germany, Britain, France, Italy, and Canada agreed in principle to a global minimum rate of 15 percent, applied on a per-country basis.
According to a statement issued by the UK Government after the meeting, the ministers further voiced support for OECD proposals on international tax reform, agreeing “the principles of an ambitious two Pillar global solution to tackle … Read More »
As might be expected as governments look to rebuild their COVID-buffeted economies, and to replenish their tax coffers, anti-avoidance measures are becoming the order of the day, chief among which is the proposed global minimum corporate tax rate put forward by the Biden administration.
The proposal was first discussed seriously earlier this year alongside domestic plans to increase the general and minimum tax rates (to 28 percent and 21 percent respectively), and the US authorities appear keen to press ahead in order to prevent the United States from falling out of step with the rest of the world in this regard, at a cost to its international competitiveness.
In a statement released on May 20, commenting on the progress made so far in international tax reform talks, the US Treasury announced that: “Over the last two days, leaders from the Office of … Read More »
With the international drive towards tax fairness in a post-COVID world in mind, the global minimum tax rate proposals floated by the Biden administration in the US have attracted some serious attention, not least from the Irish Government, which has traditionally benefited from its competitive corporate tax rate.
Commenting recently on the suggestion, Irish Finance Minister Paschal Donohoe stated that Ireland remains committed to international tax reform discussions but expressed concerns about the plans.
Donohoe made the comments, at a seminar on international taxation at which he observed that there is “new momentum in these discussions,” which is “driven by the strong desire to achieve certainty combined with renewed energy from the new US administration, against the significant backdrop of the pandemic as we look to recovery”.
However, he defended Ireland’s 12.5 percent corporate tax rate, and argued that countries would need to … Read More »
President Biden fleshed out his forthcoming tax direction for businesses, with the publication of “The Made in America Tax Plan”.
The report, released by the US Treasury, provided in-depth detail on the announcements made by Biden’s Administration at the beginning of April and the objectives behind the policies.
As well as hiking the rate of corporate tax to 28 percent from 21 percent, Biden’s Administration has announced the following changes to measures introduced by the former administration in 2017:
The rate of tax on global intangible low-taxed income (GILTI) will be doubled to 21 percent and it will be calculated on a per-country basis;
Tax on GILTI will apply from the first cent, rather than on the portion of income that exceeds a notional 10 percent rate of return on an investment in a foreign country;
The Administration has said it intends to “repeal the … Read More »
In Poland, the implementation of the country’s new ‘Estonia style’ corporate tax system continues apace, with the publication of new forms to be completed by companies seeking to avail themselves of the regime.
On January 1, 2021, Poland introduced a new tax regime for companies whose revenues do not exceed PLN100m (USD26.6m), which provides for an exemption from tax on reinvested profits.
On December 10, 2020, the Ministry released draft guidelines on the new regime, in Polish, including step-by-step instructions, over more than 120 pages, on the process for entering, exiting, and complying with the regime.
And earlier this month, the Polish Government published in its Journal of Laws a regulation including two forms that must be filed to opt into the regime, namely to request to join the regime and to disclose details required regarding the company’s shareholders.
For more information on this, … Read More »
On December 30, the French Government published the 2021 Finance Law in the Official Journal.
This included numerous recently announced corporate tax reliefs, including increasing the annual turnover threshold for small companies to qualify for the 15 percent concessionary rate of corporate tax to EUR10m, from EUR7.63m, with effect from January 1, 2021.
In addition, new Article 2b set new withholding tax bands and rates for non-resident individuals’ employment income for 2021, as follows:
income up to EUR15,018, zero percent;
income thereafter up to EUR43,563, 12 percent (or eight percent for recipients situated in overseas French departments); and
income above EUR43,563, 20 percent (or 14.4 percent for recipients in overseas French departments).
Additional measures included reducing the burden of three local level taxes, and proposals to introduce a VAT group regime, enabling groups of companies to be represented by a single entity for VAT purposes and … Read More »
In Turkey, a corporate tax break for businesses that newly issue their shares on Borsa Istanbul has been approved.
With the exception of certain financial services companies, businesses which list their shares on the stock exchange for the first time will benefit from a reduced rate of corporate tax of 18 percent, down from 20 percent, for up to five years. Law No. 7256, published on November 17, 2020 provides that the measure will be offered for fiscal years beginning on or after January 1, 2021.
At least 20 percent of a company’s shares must be offered in order for the business to avail itself of the reduced rate.
An earlier iteration of the law was to include a provision allowing the president discretion to lower the corporate income tax rate by up to five percentage points. However, this provision was removed from … Read More »