Rogers Sheffield & Campbell

Ernst & Young (EY) recently released their 2014 outlook for global tax policy. As of the publication of this report, EY had surveyed 61 countries, including the United States. Just 10 countries out of the 61 surveyed had announced any reductions to statutory corporate income tax (CIT) rates for 2014. Based on the fragile nature of the world's recovery from the Great Recession, this isn't particularly surprising, no matter what your political leanings are. Something that got our attention, though, was the fact that there will be fewer changes to headline corporate, personal and indirect tax rates in 2014 compared with 2013 and 2012. Instead, more governments are putting legislative changes in place that will adjust and expand the tax base for 2014 and beyond, often at the net expense of taxpayers. Some other interesting notes from the report:

Governments are trying to protect and expand their tax base. Respondents in 16 countries expect corporate tax burdens to be higher. The increase in 3 of those (France, India and Israel) are due in part to a higher statutory rate. The higher burden forecast for other countries is derived from changes that will broaden their tax base. Base-broadeners that seem to be common among more than one country (so far) include:

  • Increased tax enforcement, including more demands for disclosure and transparency, renewed focus on audit activities, and new or amended General Anti-Avoidance Rules (GAAR)
  • Changes to R&D tax incentives
  • Refinements to incentives designed to encourage capital investment
  • Changes to withholding taxes
  • Tighter transfer pricing regulations and oversight
  • Limits on interest and business expense deductibility, including a growing focus on payments made to “low tax” jurisdictions
  • Decreases to the statutory corporate income tax rate
  • Limitations to the tax treatment of losses
  • Tougher controlled foreign company (CFC) rules
  • More stringent thin capitalization rules

Browse to Page 216 to find more details from the American survey. Overall, this is an informative read.

This article was published by Earnst & Young (EY) and can be read or downloaded in its entirety:
- Rogers, Sheffield & Campbell, LLP
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