Global Tax Policy Insights

📢 EU CBAM is Now Fully Operational: What You Need to Know On January 1, the EU’s Carbon Border Adjustment Mechanism (CBAM) came into full effect. Here are the key things sustainability, finance, and strategy teams should understand: 🔹 An overview CBAM is the first fully operational border carbon pricing system designed to prevent carbon leakage, the shifting of emissions-intensive production outside the EU, while protecting EU firms subject to internal carbon costs. 🔹 What has changed? Unlike prior pilots, the 2026 implementation bases costs on actual emissions intensity of imports. The EU has “externalized” carbon pricing beyond its borders, which has implications for supply chains and global trade flows, especially for goods like steel, aluminum, cement, electricity, fertilizers, and certain chemicals. 🔹 What do companies need to do? Importers and their non-EU suppliers will need to: - Map supply chains and embedded emissions - Coordinate with suppliers on verified emissions data - Assess carbon cost exposure and potential downstream price impacts 📈 The big picture CBAM goes beyond a compliance issue for firms and has real implications for supply chains and operating costs. Investors and businesses are beginning to factor in carbon pricing and supply-chain decarbonization into their financial decisions. We’ve been helping firms manage these shifts and respond strategically. Send me a message if you’d like to learn more. Visual courtesy of Carbonwise #CBAM #EURegulations #CarbonPricing #ClimatePolicy #SustainableTrade #ClimateRisk #SupplyChainEmissions #NetZero #ESG #ClimateFinance #Decarbonization

OVERVIEW OF THE ECONOMIC STABILISATION BILLS Background: The Economic Stabilisation Bills (ESB) which have been approved by the Federal Executive Council contain some recommendations of the Presidential Fiscal Policy and Tax Reforms Committee as part of the Accelerated Stability and Advancement Plan (ASAP) of the government. The ESB seeks to amend about 15 different tax, fiscal, and establishment laws to facilitate economic stability and set the country on the path for sustained inclusive growth. Policy objectives: The proposed changes are designed to achieve the following key objectives: a) Inflation reduction and price stability  b) Complement monetary policy measures with appropriate fiscal interventions to strengthen the naira and sustain exchange rates convergence  c) Promote fiscal discipline and consolidation d) Enhance job creation and poverty alleviation e) Export promotion and diversification Proposed changes: The key changes to be made to the various laws include - 1. Amendments to the income tax laws to facilitate employment opportunities for Nigerians in Nigeria within the global value chain, including the digital economy. 2. Zero rated VAT and improved incentive regime to promote exports in goods, services, and intellectual property. 3. Amendments to facilitate investment in the gas sector and simplify the local content requirements to ensure competitiveness. 4. Reform of the foreign exchange regime to enhance the regulatory powers of the CBN, unlock more forex liquidity, strengthen the naira, and sustain rates convergence. 5. Tax reliefs for private sector employers in respect of wage awards and transport subsidies provided to their employees. 6. Tax relief to companies that generate incremental employment and retain such employees for a minimum of 3 years. 7. Fiscal discipline and enhancement of remittances from government agencies and corporations to the Consolidated Revenue Fund of the federal government. 8. Collaboration with states to suspend certain taxes on small businesses and vulnerable population such as road haulage levies and other charges on transportation of goods; business premises registration; animal trade and produce sales tax; bicycle, truck, canoe, wheelbarrow, and cart fees; shops, kiosks and market taxes and levies. 9. Introduction of “Tax Identification Consolidation and Collaboration (TICC)” initiative to expand the tax base, widen the tax net, and create a level playing field for businesses. 10. Provision of additional funding for the Students Loan Scheme. Next steps: The bills are to be transmitted to the National Assembly for passage into law.

🌍 Rethinking India’s #Tax System: #A Proposal for Fairness and Growth 💡 I recently came across a #thought-provoking post highlighting the stark disparities in India’s #income tax contributions: • #Salaried Individuals: 9 CR revenue, 4 CR in tax. • #Business Revenue: 20 CR revenue, only 80L in tax. • #Agriculture Revenue: 40 CR, 0 tax. • #Political Parties: 7,000 CR, 0 tax. • #IPL Revenue: 12,000 CR, 0 tax. The post ends with a powerful question: “And they ask when is #India’s brain drain going to stop?” It’s a valid concern. When #salaried professionals bear a #heavy tax burden while other sectors with massive revenues #enjoy exemptions, it creates #frustration and drives talent away. As a nation, we need a tax system that’s #fair, #transparent, and incentivizes growth for all. Here’s an alternate tax proposal to address this imbalance and foster a more equitable system: 1️⃣ #Progressive Taxation Across All Sectors:Introduce a progressive tax slab for all income sources—be it #agriculture, #business, or #sports entities like the IPL. For example, agricultural income above a certain threshold (say ₹50 lakh annually) could be taxed at a nominal rate of 5-10%, ensuring small farmers remain #protected while high earners #contribute fairly. 2️⃣ Tax #Political Funding with Transparency:Political parties should be taxed on donations above a certain limit (e.g., ₹1 crore per donor) at a flat rate of 10%. This would encourage transparency in political funding while generating revenue for public welfare. 3️⃣ Incentivize Salaried Taxpayers:Increase the #standard deduction for salaried individuals to ₹1.5 lakh (from the current ₹75,000) and introduce tax credits for #upskilling or #education expenses. This would ease the burden on the middle class and encourage #lifelong learning—key to retaining talent in India. 4️⃣ Tax Exemptions for #Sports with Conditions:Entities like the IPL should contribute a small percentage (e.g., 5%) of their revenue as a “#sports development tax,” which can be reinvested into #grassroots sports programs. This ensures they give back to the ecosystem that fuels their success. 5️⃣ #Simplified Business Taxation:Replace complex tax structures for businesses with a flat 15% tax on #profits, with incentives for reinvesting in #R&D or #job creation. This would encourage entrepreneurship while ensuring a fair contribution to the economy. A fair tax system isn’t just about revenue—it’s about building #trust and ensuring #every sector contributes to India’s growth story. When salaried professionals feel supported rather than #overburdened, and when exemptions are balanced with accountability, we can create an environment where talent thrives, not leaves. What are #your thoughts on this proposal? How can we make India’s tax system more equitable while driving economic growth? Let’s discuss! 💬 #TaxReform #IndiaEconomy #BrainDrain #PolicyMatters #EconomicGrowth

A client from Singapore asked me today: Nikita, how did the Indian tax department know about my foreign account? I never told them! I smiled. Because the world has changed. Under global agreements like: AEOI – Automatic Exchange of Information CRS – Common Reporting Standard FATCA – Foreign Account Tax Compliance Act Countries now automatically share financial information with each other. So whether you have: * A bank account in UAE * Stocks in the US * A property in London * Mutual funds in Singapore …India already receives that data. That’s why CBDT is nudging taxpayers now. They’re simply saying: Match your ITR with the global information we already have. It’s not scary. It’s just the reality of a transparent world. NRIs — be aware, stay compliant, stay confident. #taxfornri #NRI #globalincome #crs #fatca #aeoi #compliance #nritaxexpert

I am pleased to announce the release of the report on Amount B of Pillar One.   Agreed upon by the members of the OECD/G20 Inclusive Framework on BEPS, this new report provides a simplified and streamlined approach to apply the arm’s length principle to baseline marketing and distribution activities at country-jurisdiction level. The report is accompanied by conforming changes to the Commentary on Article 25 of the OECD Model Tax Convention.   The simplified approach is expected to reduce transfer pricing disputes, compliance costs, and enhance tax certainty for tax administrations and taxpayers alike, particularly across low-capacity jurisdictions. Content from the report has now been incorporated into the OECD Transfer Pricing Guidelines. 📚 Access the report and the Reader's Guide ➡️ https://oe.cd/5qm 🗞️ Read the web announcement ➡️ https://oe.cd/5qk #OECDtax #OECD #tax #OECDP1 #Pillar1 #internationaltax #taxreform #AmountB #TrustinTax #TaxCertainty #TransferPricing #BEPS

🤔 Mrs Nirmala Sitharaman, Hope You're Listening: My Budget Wishlist for 2025 1️⃣ Tax Exemption on First ₹5 Lakh of Income Currently, incomes up to ₹2.5 lakh in the old regime and ₹3 lakh in the new regime are tax-free. My suggestion: Start the tax slab from ₹5 lakh across both regimes. This would lower tax liability, put more money in people’s hands, and boost GDP growth. 2️⃣ Capital Gains Relief for Long-Term Investments Exempt mutual funds and equity investments held for over 10 years or until retirement. This would encourage long-term wealth creation and support retirement savings, especially in a country with limited social security systems. 3️⃣ Tax Reforms on NPS Withdrawals Currently, 40% of the NPS maturity corpus must be used to purchase an annuity, and the entire annuity payout is taxed as per the individual’s slab. Making the annuity component tax-free would incentivize retirement savings and make NPS more attractive. 4️⃣ Equitable Taxation for High-Income Farmers Introduce tax reforms for high-income farmers to ensure fairness without burdening small farmers. Agriculture income is currently exempt, By taxing high-income farmers, the government can create a revenue stream to compensate the existing taxpayers who shoulder the burden today. 5️⃣ Increased Deduction for Home Loan Interest The current deduction for home loan interest under Section 24B is capped at ₹2 lakh, which is insufficient for urban taxpayers. For example, a ₹1 crore loan at 8.5% interest for 20 years results in an annual interest of over ₹8 lakh in the initial years, but only ₹2 lakh is deductible. Increasing this limit would boost the real estate market and make homeownership more affordable. 6️⃣ Simplified HRA Rules Revamp the complex HRA exemption rules. A straightforward approach: Exempt the lesser of the HRA component or rent paid. This would provide meaningful relief to salaried individuals. 7️⃣ Healthcare Tax Relief Exempt health insurance premiums from GST or Increase deductions under Section 80D. This would encourage more people to get insured, reducing the financial burden of medical emergencies. 8️⃣ Simplify and Stabilize Tax Policies Frequent changes in tax rates and policies make long-term financial planning difficult. Stability fosters confidence and smoother compliance. 🫵 DO you know this? India has a population of 145 crore, yet only 8.09 crore people (5.5%) file income tax returns, and just 3.2 crore (2.2%) pay taxes. In comparison, around 10% of China's population pays taxes, while in the USA, it's about 43%. 📺 I recently shared these ideas on CNBC during a panel discussion with my professional colleagues and friends What’s on your Budget 2025 wishlist? Let’s discuss this in the comments below! #Taxation #Budget2025 #PersonalFinance

✍️ 💥 𝗚𝗹𝗼𝗯𝗮𝗹 𝗠𝗶𝗻𝗶𝗺𝘂𝗺 𝗧𝗮𝘅: 𝗔 𝗢𝗻𝗲-𝗦𝗶𝗱𝗲𝗱 𝗗𝗲𝗮𝗹? While the EU moved ahead with Pillar 2 implementation, the US just negotiated a powerful 𝗲𝘅𝗲𝗺𝗽𝘁𝗶𝗼𝗻. 📣 𝗧𝗿𝗲𝗮𝘀𝘂𝗿𝘆 𝗦𝗲𝗰𝗿𝗲𝘁𝗮𝗿𝘆 𝗕𝗲𝘀𝘀𝗲𝗻𝘁 𝗰𝗼𝗻𝗳𝗶𝗿𝗺𝗲𝗱: 👉 “OECD Pillar 2 taxes will not apply to US companies.” 👉 Section 899 — the “revenge tax” — will be dropped. 🎯 Estimated tax savings for US multinationals? $𝟭𝟬𝟬 𝗯𝗶𝗹𝗹𝗶𝗼𝗻 𝗼𝘃𝗲𝗿 𝘁𝗵𝗲 𝗻𝗲𝘅𝘁 𝗱𝗲𝗰𝗮𝗱𝗲. How? Because US domestic tax rules (e.g. GILTI) are said to be “broadly equivalent.” 🧩 But here’s the problem: This isn’t technical. It’s 𝗽𝗼𝗹𝗶𝘁𝗶𝗰𝗮𝗹. ✔️ The US pushed for Pillar 2. ✔️ The EU implemented it. ❌ And now the US gets a carve-out — 𝗷𝘂𝘀𝘁 𝗹𝗶𝗸𝗲 𝗙𝗔𝗧𝗖𝗔, where Washington forced the world to exchange financial info… without doing so itself. 📉 This creates a 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗮𝗹 𝘁𝗮𝘅 𝗮𝗱𝘃𝗮𝗻𝘁𝗮𝗴𝗲 𝗳𝗼𝗿 𝗨𝗦-𝗯𝗮𝘀𝗲𝗱 𝗺𝘂𝗹𝘁𝗶𝗻𝗮𝘁𝗶𝗼𝗻𝗮𝗹𝘀. 📉 It entrenches 𝗮𝘀𝘆𝗺𝗺𝗲𝘁𝗿𝗶𝗰 𝗰𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 in a system designed to ensure global fairness. If this deal is approved by the OECD Inclusive Framework (147 countries), 𝗶𝘁’𝘀 𝘁𝗵𝗲 𝗲𝗻𝗱 𝗼𝗳 𝗮 “𝘂𝗻𝗶𝘃𝗲𝗿𝘀𝗮𝗹” 𝗣𝗶𝗹𝗹𝗮𝗿 𝟮. 🧨 Europe must now ask: 💬 𝗪𝗵𝘆 𝗮𝗿𝗲 𝘄𝗲 𝗶𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁𝗶𝗻𝗴 𝗮 𝗴𝗹𝗼𝗯𝗮𝗹 𝗺𝗶𝗻𝗶𝗺𝘂𝗺 𝘁𝗮𝘅... 𝘁𝗵𝗮𝘁’𝘀 𝗻𝗼𝘁 𝗴𝗹𝗼𝗯𝗮𝗹? 💬 𝗪𝗵𝘆 𝗮𝗰𝗰𝗲𝗽𝘁 𝗮 𝗿𝗲𝗴𝗶𝗺𝗲 𝘁𝗵𝗮𝘁 𝗽𝘂𝗻𝗶𝘀𝗵𝗲𝘀 𝗼𝘂𝗿 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝘄𝗵𝗶𝗹𝗲 𝘁𝗵𝗲 𝗨𝗦 𝘄𝗮𝗹𝗸𝘀 𝗮𝘄𝗮𝘆 𝘄𝗶𝘁𝗵 𝘁𝗵𝗲 𝗯𝗲𝗻𝗲𝗳𝗶𝘁𝘀? 📌 The time has come: If the US opts out, 𝗘𝘂𝗿𝗼𝗽𝗲 𝘀𝗵𝗼𝘂𝗹𝗱 𝗿𝗼𝗹𝗹 𝗯𝗮𝗰𝗸 𝗣𝗶𝗹𝗹𝗮𝗿 𝟮. Anything less would be 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝘀𝘂𝗿𝗿𝗲𝗻𝗱𝗲𝗿. Fieldfisher Belgium École Supérieure des Sciences Fiscales (ICHEC-ESSF) #PillarTwo #OECD #GlobalMinimumTax #Section899 #FATCA #USException #TaxJustice #InternationalTax #TaxSovereignty #FiscalStrategy #EU #LevelPlayingField

In my recent columns for Business Standard, I’ve been exploring a paradox: India’s macro fundamentals appear robust, yet net foreign flows remain underwhelming. To understand this, I think we need to look beyond the headlines, at the underlying market microstructure and tax policy. Part 1: The "Exit Door" Paradox The surge in domestic savings into equity markets is a success story, but it has created a unique friction point. This liquidity has offered foreign investors (FPI/FDI) attractive exit opportunities, while high valuations has limited their entry points. To balance this, we must provide domestic savers with better tax-adjusted options in fixed income, hybrids, and commodities. Paradoxically, allowing some domestic capital to flow out may actually help stabilize the inward flow. 🔗 [Read Part 1: https://bit.ly/4k21mYC] Part 2: Solving for Tax Friction We must address the "Outlier" status. Foreign investors still see India’s source-based withholding tax as a significant hurdle. A shift toward a residence-based model is essential for global competitiveness. Furthermore, for our domestic markets to truly mature, I believe we need to move towards an asset-agnostic, low LTCG tax rate. This would encourage capital to flow beyond just equities and into corporate bonds, InvITs, and REITs—the very instruments required for long-term capital formation. 🔗 [Read Part 2: https://bit.ly/49LGUI5] #IndiaEconomy #CapitalMarkets #TaxPolicy #FPI #Investment #BusinessStandard

📢 I’m thrilled to share the results of the most significant research from my PhD on tax progressivity and the challenges of equitable taxation in developing countries, with a focus on Latin America. The work published by UNU-WIDER - United Nations University World Institute for Development Economics Research introduces innovative concepts and a new index designed to more accurately assess tax burdens across income groups, providing fresh insights into the inequalities within tax systems. Based on recent evidence showing that individuals at the lower end of the income distribution bear a disproportionately higher tax burden than the top 1%, I introduce the concept of Vertical Progressivity and a new tool for measuring it: the Progressive Vertical Index (PVI). The PVI is a novel metric that captures the tax burden disparity between the wealthiest 1% and the bottom 50% of income earners. Tested with a dataset from Mauricio de Rosa, Ignacio Flores, and Marc Morgan, covering 10 Latin American countries over 20 years, the PVI offers an innovative, simple and transparent approach to understanding and addressing the lack of progressivity in developing countries. I am deeply grateful to Nestor Castañeda, Ignacio Flores, Andres Mejia Acosta, Eduardo Ortiz-Juarez, Cristóbal Otero, Joaquín Prieto, Amina Ebrahim, Kwabena Adu-Ababio, Nergis Gulasan, Andrea Repetto, Natalia Pushkareva, Stephen Daly, Clair Quentin, John Snape, and Andy Summers for their invaluable feedback on early stages of this work. Here you can access the complete version of the paper: https://lnkd.in/e2Jnmtu4

NITI Aayog’s Push for Tax Certainty on PE & Profit Attribution - A Step in the Right Direction Foreign investors have long flagged Permanent Establishment (PE) and profit attribution as major pain points in India’s tax landscape - complex definitions, inconsistent interpretations, and prolonged litigation. NITI Aayog’s latest Report on Enhancing Certainty, Transparency, and Uniformity in PE and Profit Attribution aims to address just that - with practical, forward-looking recommendations to make India’s tax regime more predictable and investor-friendly. Key Highlights: a. Legislative Clarity – codify clear, internationally aligned definitions of PE and profit attribution, balancing global best practices (OECD/UN) with India’s source-based taxation rights. b. Stakeholder Engagement - institutionalize public consultations with industry and tax experts before major international tax policy changes. c. Dispute Resolution - encourage bilateral APAs on PE attribution and explore mandatory binding arbitration for MAP cases. d. Capacity Building - regular training for Assessing Officers to ensure consistent, fair application of PE and TP principles. e. Optional Presumptive Taxation Scheme - the Report’s most striking recommendation: industry-wise presumptive profit rates (e.g. infra @10%, marketing support @15%, digital/e-commerce @30%, consultancy/software @20%). No separate PE determination needed, serving as a safe harbour. Simplified compliance and reduced litigation. Why it matters: if implemented, such a framework can dramatically reduce PE disputes, enhance investor confidence, and reinforce India’s positioning as a transparent, predictable, and business-friendly jurisdiction - aligning with the broader vision of ‘Make in India’ and global tax consistency. #InternationalTax #Policy #PE #ProfitAttribution #NITIAayog #EaseOfDoingBusiness #TaxCertainty