tax policy reforms 2019directive (atad) by eu countries and the multilateral instrument (mli) tax...
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TAX POLICY REFORMS 2019 OECD AND SELECTED PARTNER ECONOMIES
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TAX POLICY REFORMS: OECD AND SELECTED PARTNER ECONOMIES
36 OECD countries + ArgentinaIndonesia and South Africa
Identify major tax reforms and taxpolicy trends across countries
TAX POLICY REFORMS 2019 - 3
BACKGROUND
GLOBAL ECONOMIC GROWTH SLOWED IN 2018 BUT TRENDS HAVE DIVERGED ACROSS COUNTRIES
Source: OECD Economic Outlook 103 database
Real GDP growthYear-on-year percentage changes
0
1
2
3
4
5
6
7
0
1
2
3
4
5
6
7
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42011 2012 2013 2014 2015 2016 2017 2018
World OECD non-OECD% %
TAX POLICY REFORMS 2019 - 5
AVERAGE TAX REVENUES HAVE REACHED A NEW RECORD LEVEL
Long-term evolution of the OECD average tax-to-GDP ratio (1965 – 2017)
Source: OECD Global Revenue Statistics Database
6 - TAX POLICY REFORMS 2019
24.9
34.2
0
5
10
15
20
25
30
35
40
45
50
55
1965 1975 1985 1995 2005 2015
Range Average
%
BUT THERE ARE STILL WIDE DIFFERENCES IN TAX REVENUECOLLECTION ACROSS COUNTRIES
Tax revenues as a share of GDP by country in 2017
Note: 2016 data used for Australia, Indonesia, Japan and South Africa.Source: OECD Global Revenue Statistics Database.
0
5
10
15
20
25
30
35
40
45
50
Tax revenues in 2017 OECD average
%
TAX POLICY REFORMS 2019 - 7
KEY FINDINGS
TAX POLICY TRENDS IN 2019
Small PIT cuts, targeting low and middle income earners, workers and the elderly
Continuing but less significant CIT rate cutsSignificant progress on BEPS measures
Stabilisation of standard VAT ratesVAT revenues expected from administrative and anti-fraud measures
Increased taxes on harmful consumption, especially on tobacco and sugary drinks
Slowing progress on environmental taxes, particularly on energy taxation
Limited property tax changes
TAX POLICY REFORMS 2019 - 9
In 2019, combined statutory CIT rates ranged from 9% in Hungary to 32.02% in France.
In 2019, there were only two countries with CIT rates above 30%, against 22 in 2000. Meanwhile, the number of countries with CIT rates below 20% increased from two in 2000 to 11 in 2019.
10 - TAX POLICY REFORMS 2019
Corporate income tax (CIT) rate cuts have continued in 2019, but these rate reductions have beenless significant than the ones introduced in 2018.
The countries that are introducing the most significant CIT rate reductions tend to be those thatexhibit higher initial CIT rates, leading to further convergence in CIT rates across countries.
CORPORATE INCOME TAXES
CORPORATE TAX RATE CUTS HAVE CONTINUED IN 2019, BUT HAVE BEEN LESS SIGNIFICANT THAN IN 2018
Evolution of average statutory CIT rates between 2000 and 2019
Source: OECD Tax Database and Annual Tax Policy Reform Questionnaire
0
10
20
30
40
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
G7 average OECD average
TAX POLICY REFORMS 2019 - 11
%
COUNTRIES WITH HIGHER CORPORATE TAX RATES HAVE BEEN RESPONSIBLE FOR THE LARGEST RATE REDUCTIONS
Selected central government statutory CIT rate reductions
Source: OECD Annual Tax Policy Reform Questionnaire
12 - TAX POLICY REFORMS 2019
15%
20%
25%
30%
35%
2017 2018 2019 2020 2021 2022
France
15%
20%
25%
30%
35%
2017 2018 2019 2020 2021 2022
Sweden
15%
20%
25%
30%
35%
2017 2018 2019 2020 2021 2022
Norway
15%
20%
25%
30%
35%
2017 2018 2019 2020 2021 2022
Argentina
15%
20%
25%
30%
35%
2017 2018 2019 2020 2021 2022
Netherlands
15%
20%
25%
30%
35%
2017 2018 2019 2020 2021 2022
Belgium
Mixed corporate tax base changes
– Base narrowing, e.g. Some increases in capital allowances and R&D tax incentives, introduction of a notional interest deduction in Poland
– Base broadening, e.g. Restrictions to loss-carryover provisions, elimination of the allowance for corporate equity in Italy
BEPS and anti-avoidance measures
– BEPS minimum standards – significant progress highlighted in peer reviews
– Progress on BEPS non-minimum standards, in particular thanks to the implementation of the Anti Tax Avoidance Directive (ATAD) by EU countries and the Multilateral Instrument (MLI)
Tax and digitalisation
– Some countries are pursuing unilateral tax measures
– The OECD/G20 Inclusive Framework is working towards achieving a consensus-based multilateral solution
CORPORATE TAX BASE CHANGES HAVE BEEN MIXED BUT EFFORTS TO ADDRESS TAX AVOIDANCE HAVE CONTINUED
TAX POLICY REFORMS 2019 - 13
14 - TAX POLICY REFORMS 2019
• Some countries have introduced personal income tax (PIT) cuts, especially to support low-income earners and the elderly.
• There have been fewer PIT rate cuts than in previous years, and PIT reductions have more often been provided in the form of base narrowing provisions.
• Regarding personal capital income, some countries have modestly increased tax rates, while others have increased tax preferences for pension savings and small savers.
• Limited changes have been made to social security contributions.
PERSONAL INCOME TAXES AND SOCIAL SECURITY CONTRIBUTIONS
PERSONAL INCOME TAX BASE REDUCTIONS HAVE OFTEN BEEN TARGETED AT LOW-INCOME EARNERS AND THE ELDERLY
Base Base
Personal allowances, credits,
tax brackets
AUS DEU DNK FIN GBR ISL LTU
NLD SWE ZAF
Low-income/EITCs BEL DKN ESP FIN IRL NLD SWE
Children & other dependents AUT DEU ESP IRL
Elderly & disabled AUS FIN FRA HUN LAT NLD SWE
Self-employed &
unincorporated businessGBR NLD GBR DNK IND ITA1 POL
Miscellaneous expenses,
deductions & creditsNOR SWE POL NOR SWE USA
Personal income tax base measures introduced in 2019
Source: OECD Annual Tax Policy Reform Questionnaire
TAX POLICY REFORMS 2019 - 15
THE SLOW DECLINE IN THE AVERAGE TAX BURDEN ON LABOUR INCOME IS LIKELY TO CONTINUE
Evolution of the OECD average tax wedge on labour income for the average worker between 2000 and 2018
Source: OECD Taxing Wages Database
16 - TAX POLICY REFORMS 2019
37.4
35.5
36.5
36.1
34.5
35.0
35.5
36.0
36.5
37.0
37.5
38.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
% of labour costs
BUT TAX BURDENS ON LABOUR INCOME WILL REMAIN HIGH IN MANY COUNTRIES
Average tax wedge as a percentage of labour costs for workers earning the average wage in 2018
Source: OECD Taxing Wages Database
0
10
20
30
40
50
60
Income tax Employee SSC Employer SSC
% of labour costs
TAX POLICY REFORMS 2019 - 17
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• Standard value-added tax (VAT) rates have stabilised in recent years, at a historically high level.
• Many countries have concentrated on the fight against fraud to raise additional revenues and
strengthen their VAT systems.
• Partly to compensate for high standard VAT rates, a number of countries have expanded the
scope of their reduced VAT rates.
• A number of countries have raised their excise duties on tobacco and sugar-sweetened
beverages to deter harmful consumption.
• New trade tariffs have been introduced, which could lead to further escalations.
CONSUMPTION TAXES
CONSUMPTION TAXES, IN PARTICULAR VAT, ARE A MAJOR SOURCE OF TAX REVENUES IN MOST COUNTRIES
Consumption tax revenues as a share of total taxation in 2017
Source: OECD Global Revenue Statistics Database
TAX POLICY REFORMS 2019 - 19
0
10
20
30
40
50
60
VAT Taxes on specific goods and services Other%
STANDARD VAT RATES HAVE STABILISED AT A HISTORICALLY HIGH LEVEL IN RECENT YEARS
Long-term evolution of the OECD average standard VAT rate (1970 – 2019)
Source: OECD Tax Database and Annual Tax Policy Reform Questionnaire
2019: 19.3%
15.0
15.5
16.0
16.5
17.0
17.5
18.0
18.5
19.0
19.5
20.0
1975 1980 1985 1990 1995 2000 2005 2010 2015
%
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MORE VAT REVENUES ARE EXPECTED FROM ADMINISTRATIVE AND ANTI-FRAUD MEASURES
• Increasing reporting obligations for taxpayers – Data sharing obligations, including accounting data
– Transmission of invoicing information (including in real time)
• Testing alternative VAT collection mechanisms– Domestic reverse-charge regime
– Split-payment mechanisms
• Enlisting digital platforms in the collection of VAT on online sales
– OECD report on “The role of digital platforms in the collection of VAT/GST on online sales” endorsed by over 100 jurisdictions in March 2019
TAX POLICY REFORMS 2019 - 21
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Energy taxation• Few countries have continued to raise or extend taxes on energy use
• Some countries have lowered their energy taxes or have weakened their commitment to better aligning energy taxation with climate costs
Vehicle taxation• Vehicle taxation has seen limited progress• There have been changes to less conventional tax bases (e.g. road use, air travel)
Other environmentally related taxes• Despite their potential, the scope of other environmentally related taxes (e.g. on
plastic, chemicals, waste) remains very limited
ENVIRONMENTALLY RELATED TAXES
RECENT REFORMS SHOW SLOW PROGRESS ON PRICING CARBON EMISSIONS
Estimated proportion of CO2 emissions from energy use priced at different price levels(in EUR per tonne of CO2; 42 OECD and G20 economies; all sectors)
2015 2018
Source: OECD Effective Carbon Rates 2018 – Pricing carbon emissions through taxes and emissions trading
TAX POLICY REFORMS 2019 - 23
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• The property tax reforms introduced in 2019 were limited in number and in scope.
• Some of the reforms introduced in 2019 have focused on increasing taxes on high-value immovable property.
PROPERTY TAXES
Property tax revenues remain low in most countries. In 2017, the amount of revenuescollected from property taxes varied across countries, from 0.2% of GDP in Indonesia to4.4% of GDP in France.
PROPERTY TAX CHANGES HAVE BEEN LIMITED AND TAX REVENUES REMAIN LOW
Property tax revenues as a share of GDP in 2000 and 2017
Source: OECD Global Revenue Statistics Database
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Recurrent taxes on immovable property Recurrent taxes on net wealth Estate, inheritance and gift taxesTaxes on financial and capital transactions Non-recurrent taxes on property Other property taxesTotal property tax revenues in 2000
% of GDP
TAX POLICY REFORMS 2019 - 25
