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Ceturtdiena 29.09.2016 | Name days: Mihails, Miķelis, Mikus, Miks, Miģelis

Corporate income tax continues to decline worldwide

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIt is expected that the trend to reduce corporate income tax will continue around the world in 2016. Other tax rates, like those of VAT, will remain largely unchanged. There is a tendency noted for PIT to increase as certain countries continue recovering from the financial crisis, according to results of EY The Outlook for Global Tax Policy in 2016.

Significant changes are expected for the corporate income tax field – 7 out of 38 surveyed countries plan to reduce their standard CIT rate. For example, CIT rate in Norway is set to reduce from 27% to 25%, in Israel – from 26.5% to 25%, in Denmark – from 23.5% to 22%. Spain is expected to experience the most rapid decline this year – from 28% to 25%. One of the countries included in the survey – India – plans to increase the corporate income tax rate from 33.99% to 34.608%.

«We see that developed economies still want to establish more competitive tax systems and retain tax revenue – we currently observe the tendency for governments to slightly reduce CIT and the general tax burden, expanding the taxable income base at the same time. In Latvia’s case it is worth keeping in mind that the established 15% corporate income tax rate is already lower than rates found in developed economies. Another trend noticed among large economies is to reduce indirect and PIT tax rates,» – says EY partner in Latvia Ilona Butane.

In total, 34% of countries assessed by EY plan to reduce CIT, 45% of countries plan to keep CIT at its current level and 18% of countries plan to increase the tax rate this year. EY researchers note that this year’s reduction of CIT is higher than those of 2015 and 2014, when the general CIT rate decreased 16% and 26% (as opposed to 34% this year).

None of the 38 countries surveyed by EY have any plans to reduce the standard VAT rate this year. In addition, eight of the countries added to the list have plans to increase the general VAT burden in relation to the expansion of the range of taxable income.

Only two countries – Hungary and Norway – plan to reduce PIT this year. Canada, Malaysia, Mexico, Singapore and South African Republic have either already increased or plan to increase PIT this year.

EY’s survey included USA, Australia, Belgium, Brazil, Czech Republic, South Africa, Denmark, France, the Philippines, Hong Kong, India, Indonesia, Ireland, Israel, Italy, Japan, New Zealand, Canada, China, Cyprus, Russia, Great Britain, Luxembourg, Malaysia, Mexico, Netherlands, Norway, Poland, Singapore, Slovakia, Spain, Switzerland, Taiwan, Thailand, Hungary, Germany and Vietnam.

Ref: 102.109.109.7835


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