Global Tax Policy Insights

I am pleased to announce the release of the report on Amount B of Pillar One.   Agreed upon by the members of the OECD/G20 Inclusive Framework on BEPS, this new report provides a simplified and streamlined approach to apply the arm’s length principle to baseline marketing and distribution activities at country-jurisdiction level. The report is accompanied by conforming changes to the Commentary on Article 25 of the OECD Model Tax Convention.   The simplified approach is expected to reduce transfer pricing disputes, compliance costs, and enhance tax certainty for tax administrations and taxpayers alike, particularly across low-capacity jurisdictions. Content from the report has now been incorporated into the OECD Transfer Pricing Guidelines. 📚 Access the report and the Reader's Guide ➡️ https://oe.cd/5qm 🗞️ Read the web announcement ➡️ https://oe.cd/5qk #OECDtax #OECD #tax #OECDP1 #Pillar1 #internationaltax #taxreform #AmountB #TrustinTax #TaxCertainty #TransferPricing #BEPS

In my recent columns for Business Standard, I’ve been exploring a paradox: India’s macro fundamentals appear robust, yet net foreign flows remain underwhelming. To understand this, I think we need to look beyond the headlines, at the underlying market microstructure and tax policy. Part 1: The "Exit Door" Paradox The surge in domestic savings into equity markets is a success story, but it has created a unique friction point. This liquidity has offered foreign investors (FPI/FDI) attractive exit opportunities, while high valuations has limited their entry points. To balance this, we must provide domestic savers with better tax-adjusted options in fixed income, hybrids, and commodities. Paradoxically, allowing some domestic capital to flow out may actually help stabilize the inward flow. 🔗 [Read Part 1: https://bit.ly/4k21mYC] Part 2: Solving for Tax Friction We must address the "Outlier" status. Foreign investors still see India’s source-based withholding tax as a significant hurdle. A shift toward a residence-based model is essential for global competitiveness. Furthermore, for our domestic markets to truly mature, I believe we need to move towards an asset-agnostic, low LTCG tax rate. This would encourage capital to flow beyond just equities and into corporate bonds, InvITs, and REITs—the very instruments required for long-term capital formation. 🔗 [Read Part 2: https://bit.ly/49LGUI5] #IndiaEconomy #CapitalMarkets #TaxPolicy #FPI #Investment #BusinessStandard

A lot of discussions emerging in mainstream media around wealth distribution, what’s right and what’s not. Here’s how I break it down (Personal Views) - The trifecta of wealth survey, wealth redistribution, and inheritance tax, should be assessed drawing insights from real-world examples to highlight their potential implications. Wealth Survey: The proposition of a nationwide wealth survey raises concerns regarding individual privacy and property rights. It challenges democratic principles by intruding into personal finances and evokes comparisons with authoritarian regimes. 1. Threat to Privacy and Property Rights: Consider the case of East Germany under the Stasi regime, where citizens endured intrusive surveillance, including monitoring of personal finances. Such practices not only violated privacy but also undermined the foundational right to property, fostering a climate of fear and distrust. 2. Political Instrumentation: History is replete with examples of governments weaponizing personal data for political ends. In China, the Social Credit System exemplified how comprehensive surveillance, including financial monitoring, can be wielded as a tool of social control, stifling dissent and individual autonomy. Wealth Redistribution: While acknowledging strides in targeted welfare distribution, blanket wealth redistribution poses risks to economic growth. It risks stifling innovation and discouraging entrepreneurship, contrary to the objectives of sustainable development. 1. Balancing Welfare and Economic Growth: Sweden's welfare state model provides valuable insights into targeted welfare distribution. While Sweden boasts extensive social safety nets, it also champions entrepreneurship and innovation, demonstrating that effective welfare policies need not stifle economic dynamism. 2. Historical Lessons: The collapse of the Soviet Union serves as a stark reminder of the perils of overzealous wealth redistribution. Centralized economic planning and excessive state intervention led to economic stagnation and societal unrest, underscoring the importance of market-driven incentives in driving sustainable growth. Inheritance Tax: 1. Cultural Dynamics: Examining cultural attitudes towards wealth transfer offers valuable perspective. In Japan, where familial legacies hold immense significance, proposals for inheritance taxes have sparked heated debates, with many viewing such measures as encroachments on traditional values of familial responsibility and intergenerational support. 2. Policy Context: France's experience with inheritance taxes provides instructive lessons. Despite its progressive taxation policies, France has grappled with issues of capital flight and wealth preservation strategies, highlighting the complexities of implementing inheritance taxes within diverse socio-economic contexts.

India - France Tax Treaty Amended. And this one is not cosmetic! The amendment quietly changes how cross-border structures, dividend flows, and business models between India and France will be taxed. 1. Capital gains on shares Full taxing rights now move to the country where the company is resident. This will directly influence exit structuring and holding company decisions in cross-border M&A. 2. MFN clause removed A major source of treaty litigation disappears. 3. Service PE concept introduced Foreign companies rendering services in India now face clearer PE exposure risk. Tracking employee presence and project duration will be critical. Why this matters These amendment are really about certainty + alignment. Less interpretational play, more structured tax positions. For international tax teams, investors, and founders operating between India and France - this will impact structuring, compliance strategy, and litigation outlook. Next watchpoint: Implementation timeline post ratification. #dtaa #taxtreaty #india #france #internationaltax #tax

🎺 𝐓𝐫𝐮𝐦𝐩 𝐚𝐧𝐝 𝐓𝐚𝐱𝐞𝐬: 𝐖𝐡𝐚𝐭 𝐭𝐨 𝐄𝐱𝐩𝐞𝐜𝐭 𝐟𝐨𝐫 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬𝐞𝐬? 🌟 With a strong voter mandate, President-elect Donald Trump is poised to advance his ambitious tax policy agenda. I am sharing a breakdown of the key plans and their potential impacts, based on insights from economics, finance, and accounting research: 𝑲𝒆𝒚 𝑻𝒂𝒙 𝑷𝒐𝒍𝒊𝒄𝒚 𝑷𝒍𝒂𝒏𝒔 𝒇𝒐𝒓 𝑩𝒖𝒔𝒊𝒏𝒆𝒔𝒔𝒆𝒔 📊 • Extension of 2017 Tax Cuts and Jobs Act (TCJA): Businesses will likely continue benefiting from low corporate tax rates and favorable depreciation rules for investment (capital expenditures) and R&D. • Further Tax Cuts: Potential reduction of corporate tax rates from 21% to as low as 15%. • Tariffs and Import Incentives: New tariffs on imports could be paired with incentives for US-domestic production. • Reduced IRS Budget for Enforcement: Cuts to IRS funding may reduce tax enforcement, potentially creating more leeway for corporate tax planning. 𝑾𝒉𝒂𝒕 𝑫𝒐𝒆𝒔 𝑹𝒆𝒔𝒆𝒂𝒓𝒄𝒉 𝑺𝒂𝒚 𝑨𝒃𝒐𝒖𝒕 𝒕𝒉𝒆 𝑷𝒐𝒕𝒆𝒏𝒕𝒊𝒂𝒍 𝑰𝒎𝒑𝒂𝒄𝒕? 🔬 In a working paper with Rebecca Lester from Stanford University Graduate School of Business, we review the evidence on how firms respond to tax incentives. Key takeaways include: • Investment Growth: Increased tax deductions for R&D and investment effectively boost growth and employment, but some benefits may be windfall gains for firms rather than new investments. • Attractiveness of Lower Tax Rates: A low corporate tax rate (21% vs. ~30% in Germany/France) attracts international investment and stimulates domestic business activity. • Cost-Effectiveness: Tax rate cuts are costly for public finances due to permanent revenue losses. Incentives like depreciation rate increases are budget-neutral in the long run and can also drive growth. • Policy Uncertainty: Firms hesitate to invest without credible, sustainable tax policies. Certainty is critical to maximizing the benefits of these incentives. • Tax Enforcement Trade-offs: Lower enforcement could encourage avoidance but also reduce capital availability for smaller firms, as tax enforcement improves information quality for lenders. • Green taxes: Firms do respond to carbon taxes and related policy tools. The question is how and by how much, a crucial question for effective climate policy design Our full paper 📄 is available here: https://lnkd.in/e8vjYyR5 We were kindly invited to present these and other research insights at the 2024 Journal of Accounting and Economics Conference. Huge thanks to our discussant Jennifer Blouin and all attendees for their invaluable feedback! Have thoughts or questions? Drop them 👇 in the comments. I’ll also share links to studies supporting these findings below. 🚀 #Taxes #Economics #Trump #Research #Investment Ed deHaan Michelle Hanlon Jeff Hoopes Scott Dyreng Lisa De Simone Anthony Welsch Andrew Belnap Jaron Wilde John Gallemore Harald Amberger Christoph Spengel

𝗧𝗮𝘅 𝗧𝗿𝗲𝗮𝘁𝗶𝗲𝘀 𝗶𝗻 𝗧𝗿𝗮𝗻𝘀𝗶𝘁𝗶𝗼𝗻: 𝗪𝗵𝗲𝗻 𝗦𝘂𝗯𝘀𝘁𝗮𝗻𝗰𝗲 𝗕𝗲𝗰𝗼𝗺𝗲𝘀 𝗡𝗼𝗻-𝗡𝗲𝗴𝗼𝘁𝗶𝗮𝗯𝗹𝗲 Recent developments indicate that scrutiny assessments of Mauritius-based entities for FY 2023–24 (AY 2024–25) have witnessed a shift in approach. In several cases, instead of concluding assessments at the field level, matters appear to be getting referred to the FT&R division, with possible exchange-of-information requests being initiated with the Mauritius authorities to examine commercial substance. While this may seem like something within the law only, it reflects a broader and more deliberate focus on aligning treaty benefits with demonstrable economic presence. This trend can be viewed in the context of evolving judicial and regulatory thinking, including the Supreme Court’s ruling in the Tiger Global case, which has reiterated that treaty entitlement cannot rest solely on documentation such as a Tax Residency Certificate. The emphasis is clearly moving toward a “substance over form” paradigm, where factors like decision-making, control, financial capacity, and operational footprint are becoming increasingly relevant in determining eligibility for treaty relief. From a practical standpoint, this should not be seen as a cause for concern, but rather as a timely reminder. Structures involving Mauritius, and potentially other jurisdictions, may increasingly be subject to deeper scrutiny, including cross-border verification. For taxpayers and advisors alike, the message is clear: substance is no longer optional. Proactive review, robust documentation, and alignment of commercial rationale with legal form will be critical in navigating this evolving landscape. #InternationalTax #TaxTreaty #SubstanceOverForm #TaxCompliance #CrossBorderTax #MauritiusTax #ExchangeOfInformation #TaxScrutiny #GlobalTax #TaxAdvisory #TaxRiskManagement #EvolvingTaxLandscape #BEPS #TaxGovernance #Scrutinyassessments

📊 The Finance Bill 2026: An Asymmetrical Burden on Marginal Taxpayers? Following the unveiling of the Finance Bill 2026, I have received numerous queries from journalists and well-wishers analyzing the reshaped personal tax structure. Our team has crunched the numbers, and the data reveals a stark reality for mid-to-low-income earners. While the baseline tax-free threshold was increased by Tk 25,000, this relief has been entirely eroded by structural adjustments. Here are the three most critical takeaways from our impact analysis: 1. The Middle-Class Squeeze Taxpayers with a gross monthly income of Tk 74,000 will face a staggering 49% increase in their tax liability. This sharp rise is primarily driven by two concurrent changes: the complete abolition of the 5% introductory tax slab and the reduction of the investment tax credit from 15% to 10%. 2. Upward Trajectory for Mid-Income Earners This elevated tax trend persists for individuals earning up to Tk 100,000, who will continue to shoulder a disproportionately higher tax burden under the new regime. 3. The High-Income Gap In contrast, for individuals earning above Tk 250,000, the overall tax burden increases by a modest 10%, exposing a clear asymmetry in how these fiscal changes hit different income brackets. 🔍 Macro Insights & Policy Concerns Inflation vs. Policy: In a prolonged, high-inflation environment, fiscal policy should ideally provide breathing room for marginal taxpayers. Instead, slashing the investment tax credit and removing the initial 5% buffer creates severe pressure on disposable incomes. The Retrospective Dilemma: A perennial question remains—why must we continue to implement significant fiscal legislation on a retrospective basis? Predictability is the cornerstone of tax compliance. A Case for CPI Indexation: To ensure a truly progressive system, tax slabs should incorporate Consumer Price Index (CPI) indexation. Without it, inflation acts as an unlegislated tax hike, unfairly penalizing standard wage earners (bracket creep). The Risk of High Marginal Rates: We must cautiously re-evaluate the top marginal tax bracket. When combined with surcharges, the effective tax rate can climb to around 44%. Globally, excessively high effective rates often backfire, leading to a shrinking tax base through under-declaration and unintended capital flight. 🎯 As we navigate these new regulations, having a clear data-driven map is essential. Attached is the comprehensive post-budget analysis prepared by our team—the definitive breakdown you look for every year. Read the full analysis below and share your perspectives on how these changes will impact corporate talent retention and consumer spending. #TaxPolicy #FinanceBill2026 #BangladeshEconomy #FiscalReform #CorporateGovernance #BudgetAnalysis

With over 30 years in tax consulting, I've seen tax laws evolve dynamically. Each year brings changes, creating a push-and-pull between tax authorities and taxpayers. While tax is sovereign, global developments can influence policy. The BEPS project suggests a future of international collaboration for fairer taxation. Amidst these changes and tech advancements, what does the future hold for tax in India? Here are my thoughts: #Automation in compliance: Indian taxpayers often express concerns about increasing compliance demands. Although technology adoption has been gradual, the future may see tax administrations automating significant portions of tax filings, thanks to the growing data lakes. While compliance requirements may not necessarily decrease, tech-enabled platforms and processes will certainly reduce the burden. New frontiers in #taxdispute and #resolution: Despite efforts to simplify tax laws, change in tax laws would be inevitable to meet emerging business models. India would have to mould its tax policies to align with the global tax reset. Amidst all this and greater visibility on global supply chains, the tussle to garner ‘fair share of taxes’ would gather steam. While tax controversies continue, the future would see alternate dispute resolution mechanisms becoming mainstream, making settlements a viable option to ensure meaningful progress to strengthen the pillar of #taxcertainty. India’s role in #GlobalTaxPolicy: India has been a key player in the global tax policy arena, engaging with both the OECD's two-pillar project and the UN's Article 12B proposal. While the OECD's Pillar 1 proposals face an uncertain future, there is a growing call for a more inclusive international tax standard-setting body. India's backing of the UN framework for international tax cooperation reflects its aspiration, along with other developing nations, to have a greater influence in global tax policy formulation, ensuring a fair allocation of taxing rights. India's approach on the global stage, as well as its domestic tax policies, will be balanced and driven by the objective of becoming a top investment destination, crucial for achieving the Vikshit Bharat vision by 2047. #ResponsibleTax: Aggressive tax planning and double non-taxation is a thing of the past. Stakeholders now demand transparency and ethical conduct, prompting companies to align their tax strategies with ESG values. As ESG becomes central to corporate strategy in India, responsible tax practices will likely enhance corporate reputation and sustainability, fostering a conscientious approach that aligns with global standards and societal expectations. The role of the tax function accordingly will undergo a sea change. With the growing convergence of tech with tax, the anatomy of modern tax professional will likely explore new horizons. As 2024 ends, it’s time to shift gears and embrace the new. What’s your take? #Tax #Technology #Transformation #FutureofTax

Kenya’s tax system doesn’t recognize or provide relief for the financial support salaried workers provide to extended family—a burden known as “black tax.” In this article, I explore how tax deductions for schooling, elderly care and other dependants can promote equity and ease middle-class pressure..... Rethinking Tax Equity: Why Kenya Must Acknowledge the “Black Tax” in Fiscal Policy: As salaried professionals in Kenya, many of us understand too well the unspoken financial obligation of supporting not just our immediate families but also extended relatives. This cultural expectation — commonly referred to as the "black tax" — reflects a deep-rooted social responsibility. Yet, it remains invisible in our tax laws. This article is particularly timely, as it comes in the midst of Kenya’s national budget-making process, a critical window for reflecting on the fairness and relevance of our current tax structures. 📍 THE CONTEXT WE CANNOT IGNORE The World Bank recently recommended raising the top marginal income tax rate to 38%, though this is not yet part of the Finance Bill 2025. Regardless, the conversation around tax reform should prompt us to examine how our fiscal system acknowledges — or ignores — the lived realities of taxpayers. 📍 THE BLACK TAX: CULTURAL OBLIGATION MEETS FINANCIAL STRAIN For many salaried Kenyans, take-home pay stretches to cover school fees, hospital bills, SHIF contributions, and daily needs of elderly parents, siblings, and dependants with disabilities. While these payments strengthen our social fabric, they are not reflected in tax reliefs. In essence, formal workers are penalized for doing what society expects of them. 📍 A THOUGHT FOR REFORM: WHAT COULD CHANGE? What if we introduced tax reliefs for: - Education fees paid directly to public schools for dependants? - Verified SHIF top-ups or health insurance premiums for elderly relatives? - Caregiver expenses or disability-related support? - Support to registered elderly care or medical institutions? These are not abstract ideas. They are everyday realities that deserve structured recognition. 📍 WHY IT MATTERS Such reforms would not only create a fairer tax system but also: - Encourage formal compliance and documentation of support. - Relieve pressure on the overburdened middle class. - Foster dignity in care for our ageing population. - Channel funds to public institutions, such as SHIF and public schools, more efficiently. 📍 LET’S OPEN THE CONVERSATION Recognizing the black tax formally is not about special treatment. It’s about equity. It’s about designing tax systems that reflect the reality of where our money goes. As we debate tax rates and fairness, let’s remember the invisible economy many of us fund — quietly, consistently, and with love. Would such reforms make a difference in your life? Let's talk. #TaxJustice #BlackTax #Kenya #FinanceBill2025 #PolicyReform #SHIF #SocialProtection #Leadership #MiddleClass