Tax executives who diligently monitor global and national tax policy changes can provide their companies with early risk management, proactive decision-making support, and ultimately mitigate the impact of “surprises”.
Where are the areas of change?
Indirect tax is an area that has seen much change – and more can be expected. Global tax surveys, found that six of the 45 jurisdictions that are tracked in surveys and that have a federal value-added tax or Goods & Services Tax are expected to increase the VAT/GST rate in next years; another eight are forecast to expand their VAT/GST base this year. This is a distinct change from past surveys, which reported no predictions of rate increases.
Transfer pricing – the pricing of goods, services and intangibles between related parties – continues to be a source of risk. In fact, for every issue of the surveys for the past nine years, transfer pricing has been found to be the leading trigger for tax audits.
Digital taxation is another area of tax policy that warrants a close watch for the rest of this year. Close to half of the 48 jurisdictions tracked by the surveys anticipate a greater tax burden on digital business activity. In recent months, many countries have moved ahead with public consultations or legislative proposals on digital services taxes.
The area of research and development (R&D) incentives is likewise seeing significant changes. Previously, many countries were focused on creating or improving R&D incentives. In a surprise reversal, that trend now seems to be declining this year. The number of jurisdictions reported in the surveys as expected to make their R&D incentives more favorable is around half what it was in past years.