11 August 2025 Global Tax Policy and Controversy Watch | August 2025 edition Although the United States (US) Trump Administration's 1 August 2025 effective date for certain tariffs has passed, the debate is far from over. Join an EY panel for a discussion (12 August, 12:00 — 13:00 EDT) on what has been settled, what is yet to come and how businesses can successfully navigate this ever-changing trade environment. On 17-18 July 2025, the G20 Finance Ministers and Central Bank Governors met in Durban, South Africa. A communiqué released at the conclusion of the meeting discusses efforts being advanced in the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework to address concerns about the Pillar Two global minimum tax, with the shared goal of finding a balanced and practical solution that is acceptable to all. It also notes the ongoing negotiations on a United Nations (UN) Framework Convention on International Tax Cooperation. On 27 June 2025, the Intergovernmental Negotiating Committee on the UN Framework Convention on International Tax Cooperation released three draft-issues notes on its workstreams: the framework convention, the early protocol on taxation of services and the early protocol on tax dispute prevention and resolution. The Committee invited stakeholders and UN member countries to submit input. The EY Worldwide Transfer Pricing Reference Guide 2025 helps international tax executives navigate complex transfer pricing rules and practices. With increasing complexity in global regulations, practitioners must stay informed about diverse jurisdictional tax laws and requirements. Updated as of 30 April 2025, this guide covers 121 jurisdictions, offering an overview into transfer pricing laws, OECD Guidelines, documentation requirements, Base Erosion and Profit Shifting (BEPS) Action 13, benchmarking, penalties and opportunities for advance pricing agreements, among other topics. The US budget reconciliation bill is now law and has significant tax implications for various sectors, particularly in business, energy and international tax. The changes could benefit corporations and pass-through entities, while also imposing new restrictions that may complicate compliance and financial planning. US President Trump issued an Executive Order on 31 July 2025 imposing additional ad valorem duties on goods from certain trading partners, effective 7 August 2025. On 21 July 2025, the Chilean Government submitted a tax reform bill to Congress that mainly introduces new simplified tax regimes for small and medium-sized enterprises and microentrepreneurs, including a temporary flat tax. To compensate revenue losses, the bill increases top marginal income tax rates for domestic individuals and limits tax exemptions for investment funds, with a new 20% withholding tax on distributions to foreign investors from public funds. On 18 July 2025, Germany enacted a tax investment program aimed at strengthening the country's appeal as a business location, with key measures including a gradual reduction of the corporate income tax rate to 10% by 2032, effective from the 2028 tax period. The program introduces a declining balance depreciation rate of up to 30% for investments in movable fixed assets made between 1 July 2025 and 31 December 2027, accelerating tax deductions for businesses. The research allowance will be expanded starting in 2026. On 1 August 2025, the European Union Court of Justice (EUCJ) determined that Italy's regional tax on productive activities (IRAP) on 50% of dividends from EU subsidiaries violates Article 4 of the Parent-Subsidiary Directive (PSD). Since 5% of dividends are already taxed under Italian corporate income tax (IRES), any additional levy may breach the exemption method. This ruling may affect both intra-EU and domestic dividend taxation. Italian financial intermediaries and insurance companies should evaluate refund claims for IRAP on dividends and manage pending claims with the Italian Tax Authority. In June 2025, Japan's National Tax Agency released guidance on the OECD's Pillar One Amount B, intended to simplify arm's-length pricing for domestic marketing and distribution. However, Japan will not implement Amount B, requiring taxpayers to rely on existing transfer pricing methods to set arm's-length prices. This applies even when dealing with counterparties in countries that have adopted Amount B and are recognized by the OECD as "covered jurisdictions." On 24 July 2025, the Luxembourg government introduced a draft law to reform the carried interest regime, set to take effect in the 2026 tax year. The proposal outlines two types of carried interest: contractual carried interest, taxed at a maximum of 11.45%, and participation-linked carried interest, potentially tax-exempt under certain conditions. This legislation aims to expand the range of beneficiaries and align with existing market models.
Document ID: 2025-1678 | ||||
