ey-global-tax-policy-outlook-for-2015

The strong focus on the tax treatment
of interest and other business expenses
that we saw in 2011–14 seems to be
sustained through 2015.
Enforcement
Ten of the 32 countries (31%) surveyed
report known or forecasted increases
in tax enforcement in 2015. This has
slowed a little from our 2014 outlook
publication, where the percentage was
39%. It does, of course, still represent an
that many tax administrations aligned
their increased enforcement levels with
the initial announcement of the BEPS
forecast an overall improvement in the
tax enforcement landscape in 2015.
Transfer pricing
Transfer pricing remains a key focus
for many countries, with nine of the 32
countries (28%) forecasting a rising tax
burden in 2015 in relation to known or
potential changes. This is an acceleration
importance of transfer pricing for
business, where companies responding
to EY’s 2014 Tax risk and controversy
survey 6 say it remains their leading
source of tax risk.
Research and development
(R&D)
Eight of the 32 countries (25%) report
known to be or expected to become more
generous overall in 2015. In contrast,
three countries (Australia, Finland and
will become less generous in 2015.
of its falling headline CIT rate, the
overall incidence of countries making
accelerating. The picture is not quite
that simple, however. Many countries
are decreasing the generosity for
large enterprises, while increasing the
availability (and generosity) of incentives
to small and medium-sized enterprises.
and European crises are now behind
them, and it indicates that a larger
proportion of future economic growth
is projected to come from the middle
market business segment.
Seven of the 32 countries (22%) report
that other business tax incentives (such
as accelerated depreciation or capital
allowances) are either known or expected
to become more generous overall in
2015. Four countries (Luxembourg,
Slovak Republic, Spain and Switzerland)
be reduced in 2015.
Losses
Six years after the height of the
of changes in tax legislation in relation
to the treatment of losses continues to
dissipate, as reported in both our 2013
and 2014 outlooks. Just four of the 32
countries (15%, Chile, Hungary, Japan
and the United Kingdom) report that
the tax burden will rise in their country
in 2015 as a result to changes to the
tax treatment of losses; Japan’s rising
burden relates to one of the basebroadening
measures to pay for a 2.5–
percentage–point 2015 headline CIT rate
cut. Twenty-seven of the 32 countries
report no known changes to the tax
is forecasting a reduction in tax burden
as a result of the tax treatment of losses.
The strong focus on the tax treatment
of interest and other business expenses
that we saw in 2011–14 seems to be
sustained through 2015. Seven of the
32 countries (22% — Australia, Chile,
China, France, Slovak Republic, South
Africa and Spain) report that the tax
burden is forecast to rise in their country
in 2015 as a result of changes to interest
deductibility. The remaining 25 report
no known changes to the treatment of
interest deductibility.
policymakers, though to a lesser extent
than those outlined above. Capital gains
taxes, thin capitalization and CFC rules
are all reported as anticipating change
the latter issues, it is likely that the
majority of countries are awaiting the
unfolding of the 2015 BEPS Actions
(Action 3 addresses CFCs) before making
any changes. This is a good but is
not guaranteed.
The outlook for US tax reform
Any outlook for taxes in 2015 would not
be complete without some discussion of
whether 2015 will be the year that US
tax reform progresses.
The desire to reform the US tax system
in order to increase US competitiveness
relative to some of its trading partners
that have lower corporate income
tax rates and territorial tax systems
remains intact.
In recent years, though, ideological
differences have hindered efforts to
advance such debate. The Republican
Party will control the legislative agenda
in 2015, and those who lead the taxwriting
committees support tax reform.
Possible compromise with President
as both parties see opportunities for
economic growth, including via business
tax reform. However, overcoming the
political hurdles to craft the details of
such legislation will be challenging.
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The outlook for global tax policy in 2015 |
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