The year 2018 has been characterised by a continuing trend towards reducing corporate taxation rates. This is the conclusion of an OECD report published on Wednesday 5 September, describing the main trends observed in the tax policy of 38 countries.
According to the report, France, Latvia, Argentina and the United States have carried out wide-ranging tax reforms this year focusing on supporting investment, by means of corporate tax cuts, but also changes to the taxation of assets and the capital income of natural persons. The other countries have adopted tax measures on a more patchwork basis.
“While these corporate tax cuts have created some concerns of a 'race to the bottom', most of these countries appear to be engaged in a 'race to the average', with their recent corporate tax rate cuts now placing them in the middle of the pack. We will be closely watching how other countries respond to this trend in the future”, said Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration.
The reforms of social security contributions, on the other hand, have been more limited, and these contributions will continue to weigh heavily on employment income in many countries, the report highlights.
Another trend in 2018 is the setting in place of new excise duty aiming to discourage the consumption of harmful products, in line with continued increases in excise duty on tobacco and alcohol. The main reforms of this type include the introduction of new taxes on sugary drinks in Ireland, the United Kingdom and South Africa, and a cannabis tax in Canada.
The OECD also notes that the taxation of largely digital companies has become a priority for many economies, echoing the ministerial discussions to take place at EU level in Vienna on Thursday and Friday (see other article).
“Wide disparities in views across countries have prevented the adoption of a common approach so far and spurred the introduction of heterogeneous measures, creating a risk of increased complexity and uncertainty”, the organisation stresses.
The report is available at https://bit.ly/2MPlKjp. (Original version in French by Marion Fontana)