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Countries Consider Post-COVID Building Blocks

Kitty Miv, Editor
03 May, 2021

Although a good many countries and regions are still deep in the throes of the pandemic, a number are now taking stock of their economies, including how to structure and rebuild them once the world returns to some semblance of normality.

In Denmark, for example, the focus – as it is more broadly on an international level – is on tax transparency and fairness, with legislation enacted to introduce a 44 percent withholding tax rate on payments to territories on the EU's list of non-cooperative territories for tax purposes.

In addition, payments to these jurisdictions will not be deductible. The withholding tax would not apply if the taxpayer proves that the beneficial owner of the payment is resident in an EU or EEA state. The changes are to apply from July 1, 2021.

Also with the international drive towards tax fairness in a post-COVID world in mind, the global minimum tax rate proposals floated by the Biden administration in the US have attracted some serious attention, not least from the Irish Government, which has traditionally benefited from its competitive corporate tax rate.

Commenting recently on the suggestion, Irish Finance Minister Paschal Donohoe stated that Ireland remains committed to international tax reform discussions but expressed concerns about the plans.

Donohoe made the comments, at a seminar on international taxation at which he observed that there is "new momentum in these discussions," which is "driven by the strong desire to achieve certainty combined with renewed energy from the new US administration, against the significant backdrop of the pandemic as we look to recovery".

However, he defended Ireland's 12.5 percent corporate tax rate, and argued that countries would need to agree on the political principles that would underlie the concept of a global minimum tax rate, and argued that "small countries, and Ireland is one of them, need to be able to use tax policy as a legitimate lever to compensate for advantages of scale, location, resources, industrial heritage and the real, material, and persistent advantage enjoyed by larger countries."

In Greece, meanwhile, it seems to be all change on the corporate tax front as well, with plans newly announced by Prime Minister, Kyriakos Mitsotakis for tax relief measures to support the economy's recovery from the COVID-19 pandemic, including a permanent reduction to the corporate income tax rate from 24 percent to 22 percent, effective from the 2021 tax year.

The Prime Minister also announced a reduction in advance income tax payments for individual entrepreneurs (to 55 percent, down from 100 percent) and for legal entities (70 percent in 2021 and 80 percent from 2022, down from 100 percent). In addition, he said the Government will extend the three percentage point cut in pension contributions for private sector employees and the suspension of the special solidarity contribution for private sector employees, both for the duration of 2022.

Until next week!


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About the Author


Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net

 

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