CFE’s Tax Top 5 – 8 July 2025

US President Donald Trump has confirmed plans to impose new “reciprocal” tariffs on key trading partners, while granting a short extension to allow for further negotiations. The White House press secretary confirmed that these tariffs, initially paused in April after Trump’s “liberation day” announcement and due to take effect on 9 July, will now be delayed until 1 August. The extension is intended to provide additional time for countries to reach agreements with Washington.

Under the announced measures, Japan and South Korea will face 25 percent tariffs, while South Africa will be subject to a 30 per cent levy. Other countries, including Malaysia, Kazakhstan, Laos, and Myanmar, will also see significant increases. Trump cited trade deficits with Japan and South Korea as national security concerns, adding that any retaliatory tariffs from these countries would result in additional US levies. However, he indicated that rates could be adjusted upwards or downwards depending on market access concessions.

Meanwhile, the EU is seeking to finalise a provisional trade agreement with Washington to avoid the imposition of a 50 per cent blanket tariff on all European exports. According to Politico, EU Trade Commissioner Maroš Šefčovič has proposed an interim arrangement that would maintain a 10 per cent tariff while discussions continue, particularly on sector-specific relief for cars and steel. The EU is keeping a €100 billion retaliatory tariff package on standby to maintain its negotiating position without escalating the dispute.

CFE Statement on the OECD Inclusive Framework BEPS Package Stocktake Exercise 

CFE Tax Advisers Europe has published an Opinion Statement in response to the OECD Inclusive Framework’s BEPS Package Stocktake, calling for simplification, proportionality, and balanced implementation to sustain competitiveness and fairness in international taxation.

The OECD/G20 Inclusive Framework is currently undertaking a stocktake exercise to examine research and evidence on the economic and behavioural impacts of the BEPS Project, both in aggregate and for each of the 15 Actions. A report will be published ahead of the October G20 meeting in response to the G20 Presidency’s request to evaluate how BEPS measures have reshaped international tax systems.

CFE’s submission highlights that while BEPS measures have achieved their objectives of tackling aggressive tax planning and enhancing fairness and transparency, the resulting complexity, compliance fatigue, and administrative burdens risk undermining these goals. EU implementation via ATAD and DAC frameworks has set global standards but imposed disproportionate burdens on EU businesses compared to non-EU competitors.

CFE in our Statement urge policymakers to simplify rules, consolidate overlapping legislation such as DAC amendments, ensure proportionality, and strengthen dispute resolution mechanisms to avoid double taxation. The statement concludes by calling on OECD, EU, and national policymakers to balance transparency and anti-avoidance with administrative feasibility, competitiveness, and taxpayer certainty.

EU Commission Adopts Taxonomy Measures to Reduce Administrative Burden for Companies & Issues Tax Incentives Recommendations on Clean Industrial Deal

Taxonomy: New Simplifications to Reduce Company Burdens

The European Commission has adopted a set of measures to simplify the application of the EU Taxonomy Regulation, originally published in draft in February 2025 as part of Omnibus I package aiming to reduce the administrative burden on companies while maintaining key climate and environmental objectives. The changes are intended to strengthen EU competitiveness by allowing businesses to focus more effectively on their core operations and sustainability transition efforts.

Under the new measures, financial and non-financial companies will be exempt from assessing Taxonomy eligibility and alignment for economic activities that are not financially material. For non-financial companies, this applies where activities account for less than 10% of total revenue, capital expenditure, or operational expenditure. Additionally, non-financial companies will not need to assess Taxonomy alignment for operational expenditure that is considered non-material to their business model.

Financial companies will also benefit from streamlined requirements. Banks will see simplifications to key performance indicators, such as the green asset ratio, and will have the option to refrain from reporting detailed Taxonomy KPIs for two years. Reporting templates have been significantly reduced, cutting data points by 64% for non-financial companies and by 89% for financial companies. Furthermore, the ‘do no significant harm’ criteria on pollution prevention related to chemicals use have been simplified.

The simplification measures were adopted via a Delegated Act which will now be scrutinised by the European Parliament and Council. The measures are set to apply from 1 January 2026 for the 2025 financial year, with an option for companies to delay application to the 2026 financial year if preferred.

Tax Incentives Recommendations to Accelerate Clean Industrial Transition 

Last week, the European Commission also issued a Recommendation outlining tax incentives designed to accelerate the EU’s Clean Industrial Deal objectives. The Recommendation sets out a framework to help Member States implement cost-effective tax measures that stimulate investment in clean technologies and industrial decarbonisation, supporting the EU’s broader aim to build a competitive, climate-neutral industrial base.

The proposal identifies two primary instruments. First, it encourages accelerated depreciation, allowing companies to deduct the full cost of eligible clean technology investments, such as renewable energy systems or energy-efficient machinery, faster or even immediately. This measure is intended to improve cash flow by reducing tax liabilities upfront. Second, targeted tax credits are recommended to directly lower corporate tax liabilities for investments in strategic sectors, such as clean technology manufacturing and decarbonisation projects, with the potential for refundability or offset against other national taxes.

The Recommendation emphasises that these incentives must be targeted exclusively at clean technologies and industrial decarbonisation, excluding fossil fuel investments, and designed to be simple, certain, and timely. Measures must also comply with EU state aid rules, either under the Clean Industrial State Aid Framework (CISAF) or, for non-CISAF measures, under the General Block Exemption Regulation. Under CISAF, tax credits and incentives are subject to project caps and aid intensity limits.

The initiative is seen as a key step towards boosting private investment, fostering a fair competitive environment for companies adopting sustainable practices, and strengthening the EU’s industrial competitiveness. Member States are expected to report on their adoption of these measures, with the Commission facilitating best practice exchanges and monitoring progress to ensure tax incentives deliver on clean investment goals and the EU’s 2050 climate neutrality target.

Inspectors Without Borders Releases Annual Report Highlighting Decade of Tax Capacity Building in Developing Countries 

The OECD and United Nations Development Programme announced a major expansion of their flagship Tax Inspectors Without Borders programme, unveiling the so-called ‘TIWB 2.0’ at the Fourth International Conference on Financing for Development held in Seville last week. The announcement coincided with the release of the “Ten Years of Hands-on Assistance in Developing Countries” 2025 Annual Report, which highlights how the initiative has helped 70 developing jurisdictions raise over USD 2.4 billion in additional tax revenues – with USD 1.91 billion mobilised in Africa alone. The initiative will continue with the approach of embedding experienced tax experts within domestic audit teams to tackle complex challenges including transfer pricing, base erosion, and profit shifting.

TIWB 2.0 will deepen commitments to tailored assistance and institutional strengthening, while expanding into areas such as the taxation of the digital economy, auditing VAT on digital trade, and implementing global minimum tax rules. The programme’s integration with the United Nations Development Programme’s broader development architecture aims to ensure that these technical interventions translate into sustainable institutional reforms and stronger domestic resource mobilisation aligned with the Sustainable Development Goals.

The OECD Secretary-General Mathias Cormann noted that TIWB 2.0 will remain country-led and responsive to jurisdiction-specific needs, while Haoliang Xu of the United Nations Development Programme emphasised that fair and efficient tax systems are central to building trust, sustainability, and inclusive development. With renewed donor support and expanded partnerships – including with the African Tax Administration Forum, the OECD Forum on Tax Administration, and others – TIWB 2.0 aims to scale its operations and strengthen the global tax capacity-building landscape in the years ahead.

OECD Recommendations to Reduce Burdem in Complying with BEPS Minimum Standards 

The OECD Inclusive Framework has endorsed a series of recommendations aimed at recognising progress and reducing burdens in the implementation of the BEPS minimum standards. Since the BEPS Project’s launch in 2013, implementation of its four minimum standards – covering harmful tax practices (Action 5), tax treaty abuse (Action 6), Country-by-Country reporting (Action 13), and mutual agreement procedures (Action 14) – has reached a mature stage, with over 145 jurisdictions committed to addressing BEPS risks. The focus is now shifting towards ensuring developing countries can fully benefit from these standards, alongside efforts to streamline peer review processes and reduce administrative burdens.

At its April 2025 Plenary meeting, the Inclusive Framework agreed to streamline Action 5 peer reviews on harmful tax practices by introducing upfront economic impact assessments to determine whether legislative reviews are necessary, reducing the frequency of monitoring from annual to three-year cycles. For Action 6 on tax treaty abuse, with over 90% of agreements now compliant or on track, the peer review cycle has been extended to once every five years, maintaining targeted technical assistance where required.

For Action 13 on Country-by-Country reporting, efforts are being focused on enabling developing countries to effectively access and use reports, including exploring low or no-cost IT solutions to overcome technological barriers. The Inclusive Framework also agreed no procedural changes are currently required for Action 14 on mutual agreement procedures, which continues to improve treaty dispute resolution efficiency, with developing countries now more engaged in the peer review process to strengthen their MAP frameworks.

Overall, these measures are intended to optimise resource allocation among jurisdictions, preserve the integrity of the BEPS minimum standards, and ensure a level playing field. A comprehensive report taking stock of BEPS implementation to date is expected in late 2025, with continued capacity-building programmes supporting developing countries to derive full benefits from the international tax framework reforms.

The selection of the remitted material has been prepared by:
Dr. Aleksandar Ivanovski & Brodie McIntosh