Luxembourg, 28 March 2014
Tax burden on the rise across virtually every type of tax
Release of the 2014 EY Global tax policy outlook
According to the official OECD data , worldwide tax revenues continued to increase over the past few years. Is this upward trend confirmed for 2014? The Outlook for global tax policy in 2014 just issued by EY provides information sourced from more than 60 countries, a review of the trends in legislation and the known tax proposals for 2014.
Whether it relates to corporate, personal or indirect taxes, the EY report finds that governments are generally making fewer changes to tax rates in 2014 compared to 2012 and 2013. In the area of corporate income tax, 10 of the 61 countries surveyed have (so far) announced statutory corporate income tax (CIT) rate reductions for 2014, and many seem to be targeting a rate of around 20% in the future. Only three countries (France, India and Israel) have announced an increase of their headline CIT rates.
Nonetheless, 16 of 60 countries are forecasting a higher CIT burden for the year ahead which indicates that the increased liability will be the result of changes to the tax base rather than to the CIT rate; known legislative changes (and proposals) for 2014 certainly seem to bear this out. The number and pace of changes designed to broaden the tax base have increased from prior years.
In a BEPS-tainted context, the most common adjustments to tax base registered in the new legislation for 2014 so far include increased tax enforcement (in 24 countries) in particular, including a higher demand for disclosure and transparency, renewed focus on audit activities, new or amended General Anti-Avoidance Rules (GAAR), changes to R&D tax incentives and limits on interest and business expense deductibility, including a growing focus on payments made to “low-tax” jurisdictions.
With so much change occurring in 2014, it will be a challenge for business to stay up-to-date with tax legislation. Almost all countries are trying to expand and protect their tax base, and many of them are either making or planning significant tax reforms. At the supranational level, not only will the OECD’s BEPS project undoubtedly drive change, but similar activity by the European Commission will require close attention, too.
As only a few details are known yet for the time being, the intended fiscal policy of the government aims at increasing tax revenues through the support of the economic growth, combined with the reinforcement of a tax collection and, as little as possible, through the increase of taxes. Except for VAT which will grow from 15% to 17% on 1st January 2015, no increase of corporate income tax or personal income tax is being announced. However, changes to existing legislation (such as the review of existing allowances and the elaboration of a comprehensive transfer pricing legislation for example) have been announced (albeit not yet in detail) and may well influence the overall tax burden of Luxembourg taxpayers.
For further information, please refer to the chapter fully dedicated to Luxembourg.
The new EY 2014 Global tax policy outlook is available online at www.ey.com/2014taxpolicyoutlook.
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Download the press release (pdf, 554kb).
 Annual Revenue Statistics publication, OECD, December 2013.
 BEPS is an OECD initiative against Base Erosion and Profit Shifting.