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

Identifying policy drivers, trends and
their impacts as early as possible and
then charting the possible trajectory
through which a country may pass
can be invaluable to an enterprise. It
can reduce uncertainty, offer insight
regarding tax risk and provide more
accuracy to budgetary planning. It can
reduce the incidences of dispute. And
importantly, it can save unnecessary
costs by helping to ensure that
transactions are correctly structured
The data we have collected from EY
tax policy professionals in 32 countries
concerning their outlook for 2015 tax
policies demonstrates just how quickly
the policy mix is changing, even before
countries look to the recommendations
Project for guidance.
Key trends continue
The broad-base, low-rate business tax
trend that has characterized the last half
decade continues to play out strongly.
Seven of the 32 countries surveyed
(22%) have already announced headline
CIT rate decreases for 2015. For those
same countries in 2014, the number
was 6, or 19%. But, at the same time,
10 of the 32 countries (or 31%, exactly
the same as for the 32 countries in
2014) report that their overall corporate
income tax burden will increase in 2015
as compared to 2014.
The increasing tax burden certainly
1 that shows
that total tax revenues are increasing in
2013 2 among a majority (21 of 30) of
organization’s survey, with the overall
climbing by 0.4 percentage points in
2013 to 34.1%, compared with 33.7%
in 2012 and 33.3% in 2011. This is still
below the 36% share in 2007.
Outliers
Chile is our 2015 nomination for the
country with the highest volume of
overall change, taking that mantle from
joint nominees Australia and France in
2014. Unfortunately, the vast majority
of these changes will create an increased
burden for corporate taxpayers. The
country is forecast to see change in 12
of the 18 data points measured in our
survey, including being the only country
of 32 surveyed to be known or forecast
to see a headline corporate income tax
(CIT) rate increase in 2015.
New trends rising
But while the broad-base, low-rate
mantra is arguably the most extensive
respondents report that more than six
in ten countries are making some form
of BEPS-related tax reform, before the
BEPS recommendations are in full and
Indeed, the tackling of hybrid
mismatches is the one area of the tax
regime that the largest proportion
of reporting countries (11 of 32) are
are also attracting growing interest
from policy makers; Controlled Foreign
Companies (CFC), interest deductibility,
transfer pricing and thin capitalization
are all attracting more attention than
in prior years. This attention is likely
to grow in 2015 as some of the more
complex and controversial elements of
the BEPS project reach fruition.
Personal taxes
Personal income taxes (PIT) also seem
to be following the broaden-the-base
mantra in 2015, though top marginal
rates remain stable. Nine of the 32
countries report an increased PIT
burden in 2015, surpassing the seven
who report a decrease in the overall
PIT burden. Thirteen countries report
a stable PIT burden in 2015, while two
32 countries (Australia, Japan and South
Africa) report that top marginal rates of
PIT may or will increase in 2015. Three
countries (Ireland, Malaysia and Spain)
report that top marginal PIT rates will
fall, while the remaining 26 forecast a
stable top marginal rate of PIT.
Indirect taxes
In the area of indirect taxes, it seems
that few countries are yet heeding the
32 countries surveyed forecast that the
indirect tax base will expand in 2015,
while two (China and Poland) forecast
that their VAT base will actually contract.
The remaining 26 forecast a stable
VAT base for 2015. Looking back, the
number of countries increasing their
headline VAT rates each year dropped
dramatically from 2011 onward.
1
2
2013 represents the latest available data.
2 | The outlook for global tax policy in 2015