A recent KPMG Global Indirect Tax Brief provides the latest information on how governments worldwide are striving to raise additional revenues by broadening their indirect tax base. This does not necessarily mean across-the-board tax increases. In many cases, countries are reducing taxes to encourage businesses to move to certain countries or to expand their presence or their output.
Some of the items noted in the report include:
- In an effort to make Ontario's economy more competitive, the province has announced plans to harmonize its Provincial Sales Tax (PST) with the Canadian federal Goods and Services Tax (GST) to create a single value-added-tax. KPMG notes that, "A harmonized sales tax could even result in a cash flow benefit for some businesses, particularly Ontario exporters."
- New Business Tax (BT) rules in China that went into effect on January 1, 2009, will affect certain offshore services that were not previously subject to the BT. Under the new rules, a service will be regarded as being provided in China if either the provider or the recipient of the service is located in China.
- Clarification of VAT tax laws in Colombia set out the rules for alleviating taxation of services provided by Colombian companies to companies or individuals without a business establishment or activities in Colombia.
- The Czech Republic is expecting legislation to be approved that will affect the VAT deduction for the purchase company cars.
- Denmark is increasing excise duties to finance the reduction of Danish income tax and to encourage environmentally friendly activities. Excise duties will be increased on tobacco, non-dietary soft drinks, chocolate and other confections, saturated dairy products and oils. Energy taxes will increase in many areas including increases on businesses for use of electricity and heating.
- In India, the Finance Minister has reduced excise duty and service tax rates with the goal of moving towards a uniform goods and services tax in 2010.
- Mexico has reduced import duty rates in an effort to "encourage investment and the preservation of factories and employment in Mexico by reducing production costs."
For details on these developments and many more, you can read the complete Global Indirect Tax Brief.