Direct Tax
Average tax revenues in the Organization for Economic Cooperation and Development OECD remain steady as spending pressures grow (21 November 2024)
The average level of tax revenues among OECD countries was largely unchanged in 2023 as governments sought to ease cost-of-living pressures amid growing spending challenges related to climate change and ageing populations, according to a new report released today.
OECD’s Revenue Statistics 2024 report shows that the average tax-to-GDP ratio for OECD countries was 33.9% in 2023, 0.1 percentage points (p.p.) below its level in 2021 and 2022, but above its pre-pandemic level of 33.4% in 2019.
In 2023, the tax-to-GDP ratio increased in 18 of the 36 OECD countries for which preliminary data are available, declined in 17, and remained unchanged in one. The largest increases (of at least 2.5 p.p.) occurred in Luxembourg, Colombia and Türkiye, while the largest declines (of at least 3.0 p.p.) were observed in Israel, Korea, and Chile.
Across the OECD, tax-to-GDP ratios ranged from 17.7% in Mexico to 43.8% in France in 2023. The difference between the highest and the lowest tax-to-GDP ratio across OECD countries was 26.1 p.p. in 2023, the smallest difference since at least 2000. Since 2019, this difference has narrowed by 5.2 p.p.
The Revenue Statistics 2024 report includes a special chapter on health taxes, which are increasingly common in OECD countries due to their capacity to generate revenues and to improve health outcomes by reducing consumption of harmful products. On average across OECD countries, revenues from excise taxes on alcohol, tobacco and sugar-sweetened beverages amounted to 0.7% of GDP and generated 2.2% of total tax revenues in 2022. However, these revenues declined as a proportion of GDP between 2000 and 2022 in almost all OECD countries, with the largest drop seen in revenues from excise taxes on alcohol.
Consumption Tax Trends 2024, also released today, highlights governments’ ongoing efforts to improve the performance of their VAT systems and combat fraud and non-compliance. The report shows that VAT revenues continue to rise across the OECD, reaching 20.8% of total tax revenue on average in 2022, up 0.1 p.p. from 2021.
According to the new report, which presents cross-country detailed comparative data on consumption tax rates, tax bases and design trends, most OECD countries have implemented reforms to ensure that VAT is effectively collected on online sales, in line with OECD standards, ensuring a level playing field between bricks-and-mortar businesses and online merchants.
27 OECD countries have introduced solutions developed by the OECD to collect VAT on e-commerce sales of goods imported from abroad. These complement measures to collect VAT on online services – such as apps and streaming services – that have now been adopted by almost all OECD countries that have a VAT.
Consumption Tax Trends 2024 explains that almost all OECD countries with a VAT have now implemented digital reporting requirements, often requiring the electronic transmission of detailed transactional information in real time or periodically, to enhance VAT compliance. However, the scope and requirements of these regimes vary across OECD countries.
Transfer Pricing
Global Update
Mutual Agreement Procedure (MAP) and Advance Pricing Agreement (APA) statistics for 2023
OECD has released statistics for MAP for 2023 and APA statistics
In addition to these statistics, the OECD issued MAP and APA awards to tax administrations for notable achievements in promoting tax certainty.
After years of rising number of pending MAPs, the 2023 statistics show that for the first time, global MAP inventories are decreasing i.e. MAPs are getting closed, with a marked uptick in the number of cases resolved. However, the number of new cases or applications during the year has fell as compared to FY 2022, but the same is in line with the earlier years. The average time to resolve a MAP case has lengthened, likely due to efforts aimed at reducing the backlog of older cases.
Furthermore, the MAP Statistics Reporting Framework distinguishes between cases received before or on 1 January 2016, which marks the date when reporting jurisdictions committed to implementing the Action 14 minimum standard. For jurisdictions that joined the Inclusive Framework after 31 December 2016, the distinction is made between cases received before or on 1 January of the year they became members of the Inclusive Framework on BEPS (IF membership).
In 2023, the U.S. Competent Authority concluded 245 MAP cases, 159 of which related to transfer pricing issues. Among the U.S. transfer pricing cases that were substantively resolved through MAP, 73% were fully resolved, while an additional 10% were partially resolved.
The 2023 MAP statistics are available by reporting jurisdiction, covering all cases, transfer pricing cases, and other cases. The term "transfer pricing cases" refers to "attribution/allocation cases" as defined in the agreed reporting framework. These are MAP cases in which the taxpayer’s request pertains to either:
- the attribution of profits to a permanent establishment (e.g. under Article 7 of the OECD Model Tax Convention) or
- the allocation of profits between associated enterprises (e.g. under Article 9 of the OECD Model Tax Convention). Any MAP case that does not fall under transfer pricing is classified as "other" MAP case.
Further, it is worthwhile to note that following jurisdictions were not involved in any MAP cases in 2023:
Angola, Anguilla, Antigua and Barbuda, Armenia, Aruba, Bahamas, Bahrain, Belize, Bermuda, Bosnia and Herzegovina, British Virgin Islands, Brunei Darussalam, Burkina Faso, Cabo Verde, Cayman Islands, Cook Islands, Cote d'Ivoire, Democratic Republic of the Congo, Djibouti, Dominica, Eswatini, Gabon, Georgia, Gibraltar, Grenada, Haiti, Honduras, Macau, China, Maldives, Mauritania, Monaco, Mongolia, Montenegro, Montserrat, Namibia, Paraguay, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Seychelles, Togo, Turks and Caicos Islands, and Uzbekistan.
The APA statistics released by the OECD are less detailed than both the MAP statistics and the APA data published directly by the IRS. However, they offer a valuable insight into the global size of APA inventories and the time required to complete APAs, including in jurisdictions that do not regularly publish APA statistics. While MAP inventories declined in 2023, global APA inventories rose to 4,080 pending APAs by year-end, highlighting the continued importance of tax certainty for taxpayers.
APA statistics were released by IRS which can be accessible via link - https://www.irs.gov/pub/irs-drop/a-24-16.pdf
Singapore: Bills to implement global minimum tax; list of jurisdictions for exchange of CbC reports; applying for certificates of residence
Recent tax developments in Singapore include the passage of bills by Parliament to implement a global minimum tax, updates by the Inland Revenue Authority of Singapore (IRAS) to the list of jurisdictions for countryby- country (CbC) reporting, and the introduction of new guidance on applying for certificates of residence.
In October 2024, Parliament passed two bills to implement the multinational enterprise top-up tax (MTT) and the domestic top-up tax (DTT), ensuring a minimum effective tax rate of 15%. These amendments will take effect for multinational enterprise (MNE) groups in Singapore starting 1 January 2025, in alignment with the OECD/G20's global anti-base erosion model rules (Pillar Two).
Further, the IRAS has updated the list of jurisdictions for the exchange of CbC reports under the Multilateral Competent Authority Agreement on Automatic Exchange of Country-by- Country Reports (2016), effective 1 January 2024. The update includes the addition of Albania and Georgia to the list of jurisdictions.
Furthermore, the IRAS has published updated guidance on applying for certificates of residence and tax reclaim forms. The update introduces new requirements, effective from 2025, for foreign-owned investment holding companies.
Indirect Tax
Egypt zero-rates service exports, dispenses with ‘receipt of benefit’ criterion
Excerpts from various sources
Egypt’s tax authorities have issued Instruction No. 78 w.e.f. 17 November 2024, thereby repealing earlier Circulars (5) and (6) of 2019 which clarified that services would be considered as exported and subject to 0% VAT only if the benefit of services was received outside of Egypt.
Accordingly, to qualify for 0% VAT, the following documents should be furnished:
- A signed service agreement between the Egyptian service provider and the foreign recipient.
- An electronic tax invoice containing all required information such as the Egyptian service provider’s details (tax ID number, address, etc.), type of service provided, value of the service, and the name of the recipient abroad, etc.
- A bank transfer from abroad to the bank supervised by the Central Bank of Egypt indicating payment for the exported service.
Saudi Arabia announces 17th and 18th waves for 2nd phase e-invoicing integration
Excerpts from various sources
Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) has announced the criteria for taxpayers to be included in the 18th wave of Phase 2 e-invoicing integration. Resident taxpayers with taxable turnover exceeding SAR 2 million during CY 2022 or 2023 should comply with the Phase 2 e-invoicing requirements between 1 June 2025 to 31 August 2025, inclusive of both dates.
Earlier in the month, ZATCA confirmed the 17th wave consisting of taxpayers with turnover more than SAR 2.5 million during CY 2022 or 2023 with a timeline of 1 May 2025 to 31 July 2025.