OECD Tax Report — Corporate Tax Rates Declining | KPMG | CA
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OECD Tax Policy Report - Corporate Tax Rates on the Decline

OECD Tax Report — Corporate Tax Rates Declining

OECD releases first annual publication of Tax Policy Reforms in the OECD.


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This is according to the OECD's first annual publication of Tax Policy Reforms in the OECD (based mostly on member countries' responses to the "OECD Tax Policy Reform Questionnaire", sent annually to all OECD member countries). The report also emphasizes that the trend of increasing standard value added tax (VAT) rates appears to have come to an end, and that corporate tax rate reductions are apparently gaining renewed momentum.

According to the report, Austria, Belgium, Greece, Japan, the Netherlands, Norway and Spain were the countries that implemented, legislated or announced the most comprehensive tax reforms in 2015. Many of the reported corporate income tax and VAT reforms reflected the effects of the OECD's Base Erosion and Profit Shifting (BEPS) project.

The report also examined five taxation trends, which have been highlighted below.

Corporate taxes
The report found that five OECD countries implemented or legislated general corporate income tax rate reductions in 2015, and four have announced rate cuts to corporate income tax in the coming years. In addition, it noted that several countries have also introduced "corporate income tax base-broadening measures" to protect domestic tax bases against tax avoidance by multinational enterprises. This move seems to be in line with the recommendations agreed upon as part of BEPS.

The report determined that increases in VAT revenues are expected in many OECD countries as a result of the shrinking scope of reduced VAT rates and tax compliance improvements. However, it notes that a number of countries narrowed VAT bases by expanding the use of reduced VAT rates.

Environmental taxes
According to the report, OECD countries were enacting environmental tax policies, however, most reforms were minor and generally limited to small adjustments on the taxation of energy use and cars.

Labour income taxes
Many of the reforms legislated or announced in OECD countries in 2015 (and coming into effect in 2016) point towards a decline in taxes on labour income. According to the report, a significant number of these reforms are focused on reducing taxes on low-income taxpayers and households with children.

Personal capital income taxes
The report stated that there were some increases in the taxation of capital income at the shareholder level in OECD countries, and that several countries are raising income tax rates on dividends and other sources of personal capital income.

For more information, contact your KPMG adviser.

Information is current to September 27, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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