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The global tax landscape is evolving at an unprecedented pace, marked by increasing complexity and heightened scrutiny. Rapid technological advancements, shifting economic paradigms and intensified international cooperation are driving significant changes in tax policy and enforcement.  For organisations operating in this dynamic environment, maintaining robust tax compliance while enhancing tax efficiency is essential. This involves conducting regular compliance audits, engaging in strategic tax planning, and performing thorough risk assessments to identify and mitigate potential tax exposures. Adopting these measures enables businesses to navigate the evolving tax landscape with greater confidence and resilience.

UNITED STATES

Caplin & Drysdale

“On 4 July, US Independence Day, President Trump signed the Big Beautiful Bill. Its foreign provisions mostly maintain the status quo, but importantly make permanent global intangible low-taxed income (GILTI), foreign-derived intangible income (FDII) and the Base Erosion and Anti-Abuse Tax (BEAT), with some changes. GILTI is renamed the ‘net CFC tested income’ regime. Its rate varies based on circumstances – if a CFC pays no foreign income tax, its domestic corporation shareholder is increased from 10.5 percent to 12.6 percent. FDII is renamed ‘foreign-derived deduction-eligible income’ and its rate increased from 13.125 percent to approximately 14 percent.”

SWITZERLAND

Alvarez & Marsal Switzerland GmbH

“Switzerland’s strategic position is undergoing a significant transformation. Global tax reforms, including Base Erosion and Profit Shifting and Pillar Two, aimed at curbing profit shifting and introducing a global minimum tax, present both challenges and opportunities for multinational enterprises (MNEs) operating in Switzerland. Historically attractive, partly due to low corporate tax rates, Switzerland is now shifting its focus toward offering compliant, substance-driven incentives to attract and retain MNEs.”

LUXEMBOURG

ATOZ Tax Advisers

“Over the past year, Luxembourg’s parliament enacted draft laws introducing significant corporate tax reforms aimed at enhancing the country’s competitiveness. Key changes include a revised and reduced minimum net wealth tax to align with constitutional requirements, clarification of tax treatment for share class redemption proceeds as capital gains not subject to withholding tax, and the introduction of an option to waive participation exemption benefits in specific circumstances.”

SPAIN

Freshfields

“The key development that has significantly shaped corporate taxation in Spain this year has been the introduction of the global minimum tax of 15 percent for large multinational groups. It has marked a major milestone in terms of direct taxation, albeit this tax has been regulated in a separate law to the Spanish Corporate Income Tax. This legislation implements the Organisation for Economic Co-operation and Development (OECD) Pillar Two initiative, establishing rules aiming to ensure that multinational enterprises and large-scale domestic groups are taxed at the minimum 15 percent tax rate when they operate in Spain.”

ITALY

Studio Tributario e Societario – Deloitte

“Italy has introduced significant corporate tax reforms over the past year, aligning with European Union (EU) directives and global standards. Notably, the interpretation of corporate tax residence has been refined to align with recent case law. Measures addressing hybrid mismatch arrangements under Anti-Tax Avoidance Directive (ATAD) 2 regulations provide penalty protection for taxpayers who prepare robust documentation demonstrating compliance with anti-hybrid rules. The tax treatment of share contribution transactions has been revised to ensure neutrality and facilitate cross-border reorganisations.”

GREECE

Ernst & Young Business Advisory Solutions SA

“During the last two years, corporate taxation in Greece has been marked by government initiatives to modernise the tax framework. This includes eliminating outdated legislation, such as the stamp duty, as well as modernising and codifying existing tax laws. In this context, after many years of parallel application of different tax incentive laws to corporate transformations, these laws have been abolished and a new cohesive framework has been put in place. Moreover, tax incentives and exemptions have been introduced for research and development investments, with a particular focus on supporting small and medium-sized enterprises.”

AUSTRALIA

Norton Rose Fulbright LLP

“Over the past year, Australia has seen several significant developments in corporate tax. The implementation of Pillar Two marks a major shift, introducing a global minimum tax and largely aligning Australia with the Organisation for Economic Co-operation and Development’s (OECD’s) recommended approach. Public disclosure requirements have also evolved, with changes to public disclosure requirements for large and multinational organisations, aimed at increasing transparency and public scrutiny. The thin capitalisation regime and new debt deduction creation rules have tightened the deductibility of interest, significantly impacting how companies structure their financing.”

UNITED ARAB EMIRATES

FTI Consulting

“With the UAE Corporate Tax (CT) regime coming into effect on 1 June 2023 and the first tax return filings due in 2025, the last year has witnessed significant activity and developments on the CT front in the UAE. The introduction of CT has enhanced the UAE’s credibility on the global stage, signalling its commitment to internationally recognised tax and regulatory frameworks.”

SOUTH AFRICA

KPMG South Africa

“South Africa is transforming its tax policy framework to align with global standards while simultaneously addressing domestic economic and environmental priorities. In line with Organisation for Economic Co-operation and Development (OECD) initiatives, South Africa enacted the Global Minimum Tax Act, introducing the Income Inclusion Rule and a Domestic Minimum Top-Up Tax for multinational enterprises (MNEs). This ensures MNEs pay a minimum effective tax rate in each jurisdiction, addressing base erosion and profit shifting, and strengthening South Africa’s tax base and revenue.”

CONTRIBUTORS

Alvarez & Marsal Switzerland GmbH

ATOZ Tax Advisers

Caplin & Drysdale

Ernst & Young Business Advisory Solutions SA

Freshfields

FTI Consulting

KPMG South Africa

Norton Rose Fulbright LLP

Studio Tributario e Societario – Deloitte