14 May 2025 Global Tax Policy and Controversy Watch | May 2025 edition Tax reform activity is accelerating, with the United States (US) House committee markups occurring, a significant step towards assembling legislation for a full House vote, which may happen before the US Memorial Day holiday (Monday, 26 May 2025). The goal is to present President Trump with a final bill by 4 July. The House Ways & Means Committee released its draft legislation, which includes extensions of expiring Tax Cuts and Jobs Act (TCJA) provisions, some of President Trump's tax proposals and select revenue raisers. On 4 April 2025, the intergovernmental negotiating committee of the United Nations (UN) Framework Convention on International Tax Cooperation released guidelines for its work, along with a roadmap for developing the Framework Convention and two early protocols. The roadmap outlines a schedule with milestones for each workstream from March 2025 to July 2027, identifying the development process and key actions to be undertaken. The guidelines provide a framework for developing work plans, establishing meeting schedules, and conducting regular multi-stakeholder consultations to ensure comprehensive input throughout the process. The Liberal Party's proposed tax measures, now likely to be included in the next federal budget, include expanding the immediate expensing and a new 20% tax credit for qualifying artificial intelligence projects, amid other measures. A public consultation on Ireland's research and development (R&D) tax credit regime is open until 19 May 2025, aimed at enhancing competitiveness in light of recent trade tariffs. Stakeholders are encouraged to provide feedback on defining innovation and addressing administrative challenges to inform potential policy improvements. On 14 April 2025, the Director of Italian Revenue issued Prot. No. 178713/2025, providing guidance for nonresident entities registered for value-added tax (VAT) in Italy to file a guarantee through an Italian VAT representative. Entities already in the VAT Information Exchange System (VIES) database must submit the guarantee by 14 June 2025. On 26 March 2025, the United Kingdom (UK) government launched a 12-week consultation to develop a new process for providing tax certainty on major investment projects, closing on 17 June 2025. Additionally, HMRC announced that taxpayers can now apply for unilateral Advance Pricing Agreements (APAs) for Cost Contribution Agreements (CCAs), with a Statement of Practice detailing expected conditions and assumptions anticipated by late Spring 2025. It is estimated that the European Union (EU), loses €90b annually to "VAT gap" due to issues such as VAT fraud, inefficient tax collection and administrative complexity. The VAT in the Digital Age (ViDA) initiative, which took effect on 14 April 2025, brings a fundamental shift in how VAT is administered across the EU. For the first time, businesses will have to adopt harmonized e-invoicing and near real-time reporting across all Member States, creating a more transparent and digital-first tax system. The US-UK Economic Prosperity Deal released on 8 May 2025, will create US$5b in US market access in the UK. The reciprocal tariff rate of 10% for UK-origin goods into the US remains. The US will release adjustments for the auto, pharmaceutical and agricultural sectors. On 14 April 2025, the EU published countermeasures against US tariffs on steel and aluminum products but decided to suspend its countermeasures for 90 days (until 14 July 2025) to allow the US authorities and the European Commission to continue negotiations. On 7 May 2025, the EU initiated a public consultation regarding additional countermeasures against US tariffs while continuing negotiations. The new law allows the Brazilian government to implement countermeasures if Brazilian products are subject to retaliatory measures by another country. This includes increasing the tax rates applicable to payments to specific countries. On 15 April 2025, the Minister of Finance announced a series of relief measures for Canadian businesses affected by the recent tariffs imposed by the US. The Department of Commerce's Bureau of Industry and Security (BIS) initiated Section 232 investigations into imports of pharmaceuticals and semiconductors, as of 1 April 2025, to determine the effects that the importation of these goods has on the national security. On 14 April 2025, the General Directorate of Taxes officially announced an important update for all taxpayers regarding the submission deadlines for the 2024 fiscal year. Specifically, the submission deadline has been extended from 30 April 2025 to 1 June 2025. On 27 March 2025, Chilean Tax Authorities issued new regulations for domestic and foreign reorganizations under a tax neutrality regime, including new restrictions for deemed tax-haven jurisdictions. Effective 1 January 2026, dividend payments to associated companies in low-tax jurisdictions will face a 17% withholding tax, while interest and royalty payments to these companies will no longer be deductible for corporate tax purposes. On 2 April 2025, the German Ministry of Finance issued guidance requiring taxpayers to submit the Transaction Matrix within 30 days of receiving a tax audit order. This requirement also applies to previous years if the audit order issued in 2025 pertains to examination periods prior to that year. Released on 16 April 2025, the Committee Stage Amendments to the draft bill to implement BEPS 2.0 relax the general anti-avoidance rule with additional safeguards. Various positive amendments are proposed to alleviate compliance burdens and provide more tax certainty. The statute of limitations and punitive actions are also reduced. On 31 March 2025, Japan enacted the 2025 Tax Reform Law and Regulations, effective 1 April 2025, introducing changes to corporate and international taxation. Notably, a new 4% special defense surtax on corporate income tax will apply for fiscal years starting on or after 1 April 2026, along with revised tax rules for small and medium-sized enterprises extended for two years. On 11 April 2025, the Polish Ministry of Finance released updated draft regulations confirming that mandatory e-invoicing (KSeF) will take effect on 1 February 2026 for large enterprises with annual sales exceeding 200 million Polish Zloty (PLN200m). Saudi Arabia's Zakat, Tax and Customs Authority has approved amendments to the VAT Implementing Regulations, providing clearer guidelines for tax compliance on nominal supplies, transfers of going concern, government grants, and tax correction procedures. On 24 April 2025, the South African Minister of Finance announced that the proposed VAT-rate increase will be reversed, maintaining the current rate of 15% from 1 May 2025. Revised versions of the Appropriation Bill and Division of Revenue Bill will be introduced soon.
Document ID: 2025-1059 | ||||
