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Tax reform and BEPS drive challenges for companies in 2018

EY's Outlook for global tax policy in 2018 shows that more than a third of the 41 countries included in the global tax study forecast higher tax burdens, while six are reducing corporate tax rates. Some of the high profile countries to cut corporate tax rates include the US, Argentina and Luxembourg.

EY's Chris Sanger commented: “The long-term trend of having a low-rate, broad-base tax system that has been playing out for many years continues in 2018. Six of the 41 jurisdictions (15 per cent) surveyed in our latest outlook have lower headline corporate income tax rates in 2018 – that’s roughly the same as the 16 per cent in our 2017 Outlook and the 18 per cent in our 2016 Outlook, when like-for-like countries are compared.”

On the road to lower tax

However, the report indicates that a tipping point may have been reached in relation to this trend, with 11 jurisdictions (27%) forecasting a lower overall corporate income tax (CIT) burden in 2018 (vs. 20% in 2017), while seven (17%) forecast a higher overall CIT burden in 2018 (vs. 22% in 2017).

Economic stimulus

Tax is not the only instrument being used by governments to stimulate economic activity. Research and development (R&D) and other business incentives are also benefitting from governments’ drive to remain competitive, with 14 of 41 countries (34%) forecasting greater support for businesses in 2018. Six jurisdictions (China, Denmark, Germany, Hong Kong, Italy and Singapore) are enhancing both R&D and other business incentives in 2018.

Multinational taxpayers

Companies operating in multiple jurisdictions will be affected by several factors such as:

  • US tax reform;
  • implementation of the OECD’s Base Erosion and Profit Shifting (BEPS) recommendations;
  • new EU anti-avoidance directives; and
  • tax transparency and disclosure measures.

Sanger explained: “The US tax reform package contains a whole spectrum of burden-decreasing measures. In response, it is probable that investor and corporate taxpayer behaviours will change in a number of ways, which in time could drive other governments – in particular the US’s closest neighbours and largest trading partners – to form corresponding tax policy measures.”


CTMfile take: The Outlook for global tax policy in 2018 is an in-depth report that gives an excellent overview of what we can expect in the coming year from initiatives such as BEPS.

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Best Practices & Benchmarking
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