BDO Corporate Tax News

• Anguilla: Guidance published on 3 July 2025 clarifies the economic substance requirements for entities operating in Anguilla. Businesses are required to conduct core income-generating activities in Anguilla, establish effective management and control, and maintain an adequate physical presence. The guidance applies to sectors, such as holding companies, banking, insurance, fund management, shipping and intellectual property. Penalties apply for noncompliance.
• Australia: On 31 July 2025, the Federal Treasurer released an interim report by the Australian Government Productivity Commission (PC), as part of the government’s inquiry into “creating a more dynamic and resilient economy.” The PC has outlined the following draft recommendations: (i) reducing the headline company income tax rate to 20% for companies with turnover below AUD 1 billion, with the 30% rate remaining for companies with turnover exceeding that amount; and (ii) introducing a net cashflow tax of 5% to be applied to the excess cashflow for all companies (both above and below AUD 1 billion turnover) to encourage increased capital investment (for an analysis of the report, see the tax alert prepared by BDO in Australia).
• Belgium: A law published on 29 July 2025 introduces new exit tax rules and stricter requirements to qualify for the participation exemption. Under the exit tax, shareholders of a company will be deemed to receive a taxable liquidation dividend when a Belgian company transfers its place of effective management abroad or is involved in an outbound cross-border reorganisation. An additional requirement will apply to benefit from the participation exemption if the minimum 10% ownership requirement is not met but the EUR 2.5 million investment requirement is met; in this case, the participation must qualify as a “fixed financial asset.”
• Bermuda: The Corporate Income Tax Agency announced on 17 July 2025 the launched of a secure digital platform to support compliance with the corporate income tax regime.
• Brazil: On 28 July 2025, the tax authorities announced the release of an updated digital tax bookkeeping system for reporting tax information on corporate income tax and social contributions on net income.
• Bulgaria: The EU Economic and Financial Affairs Council adopted final legal acts on 8 July 2025 that allow Bulgaria to become the 21st country to join the eurozone. Bulgaria will adopt the euro as its currency starting 1 January 2026.
• Cabo Verde: The corporate income tax rate will drop from 21% to 20% in 2026 and to 15% by 2030.
• Cambodia: The Ministry of Finance has released guidance on the application of a new capital gains tax regime, which will be phased in starting in September 2025. As from that date, gains from leases, the disposal of investment assets, intellectual property, etc. will be taxed. Capital gains from the disposal of real property will apply as from 1 January 2026.
• Chile: A law published on 11 July 2025 extends the 12.5% reduced income tax rate for SMEs (down from 25%) to 31 December 2027, after which the rate will jump to 15%.
• European Union: On 11 August 2025, the European Commission initiated the first review of the Foreign Subsidies Regulation, which has applied for just over two years (for prior coverage, see the article in the August 2023 issue of Corporate Tax News). The commission is seeking comments on the implementation and enforcement of the regulation, with the consultation running through 18 November 2025.

The Council of the European Union confirmed on 20 June 2025 that the proposed “unshell directive” (a directive that includes measures to prevent misuse of shell entities for tax purposes) is being dropped due to concerns about duplication and expanded administrative burdens (for prior coverage, see the article in the February 2022 issue of Corporate Tax News). A report published on 18 June identified overlaps with the DAC6 measures, so the Council has agreed that the directive should be withdrawn and appropriate changes should be made to DAC6.

• Hong Kong: On 30 April 2025, the Inland Revenue Department released a series of examples of the operation of the patent box regime that has applied since 2024 (for prior coverage, see the tax alert dated 27 My 2024).
• Indonesia: A regulation that applies as from 14 July 2025 requires ecommerce platforms (both domestic and foreign) to collect a 0.5% income tax on behalf of domestic sellers on a platform whose annual revenue exceeds IDR 500 million, thus shifting tax collection to digital marketplaces.
• Italy: A law published on 9 August 2025 introduces a reduction in the corporate income tax rate from 24% to 20% for the 2025 tax year for companies that retain at least 80% of 2024 profits in a dedicated reserve, make qualifying capital investments and increase their permanent employee headcounts.
• Kyrgyzstan: A law that applies as from 5 August 2025 introduces a special tax of 0.2% for foreign companies carrying out transactions in Kyrgyzstan where the transaction is a carried out by a Kyrgyz taxpayer on behalf of a foreign company to redirect funds from one foreign company to another foreign company. The redirection of funds is considered a receipt of funds by the Kyrgyz taxpayer from the foreign company.
• Libya: The Ministry of Finance cancelled the “jihad tax” on 14 July after a Libyan court ruled that the tax is unconstitutional. The jihad tax was used to fund defense-related activities and was withheld from income or profits.
• Lithuania: The standard corporate income tax rate will increase from 16% to 17% and the reduced rate will increase from 6% to 7% starting on 1 January 2026.
• Luxembourg: Changes to the carried interest regime that were approved on 24 July 2025 aim to enhance Luxembourg’s attractiveness for the alternative investment sector. The draft rules would differentiate between two types of carried interest: purely contractual carried interest (i.e., not linked to any form of investment) and carried interest linked to an investment, which would be taxed differently. The proposals also would enable the inclusion of a wider scope of alternative investment funds, such as debt funds and expand the scope of beneficiaries (for an analysis of the proposed rules, see the tax alert prepared by BDO in Luxembourg).

Parliament has adopted the draft law that will transpose DAC8 into domestic law. The DAC8 rules include new reporting and due diligence obligations for crypto-asset service providers. EU member states are required to transpose the rules into their domestic legislation by 31 December 2025 so they can generally apply as from 1 January 2026. The draft still must undergo further legislative and judicial approvals before it is fully adopted.

• Malaysia: On 31 July 2025, the Inland Revenue Board (IRB) released an updated public ruling on group relief for companies.
• Norway: As from 31 July 2025, companies and legal entities in Norway must register their beneficial owners in the Register of Beneficial Owners and include specific information on the beneficial owners. A beneficial owner is an individual who holds more than 25% of the shares, controls more than 25% of the voting rights, has the right to appoint or remove more than 50% of the board or exercises influence or control in other ways.
• Pakistan: The 5% Digital Presence Proceeds Tax that applied as from 1 July 2025 has been withdrawn. The tax applied on the gross proceeds derived by foreign vendors that have a significant digital presence in the country and that supply (digital or tangible) goods and services from outside Pakistan to Pakistani users. The government issued a notification of the withdrawal on 31 July.
• Poland: The government is considering the adoption of a 3% digital services tax that would apply to online businesses that generate more than EUR 750 million in revenue globally. The tax would apply to companies that operate online platforms, digital advertising businesses and data brokerages starting in 2027. Digital content providers, payment services, regulated financial services and e-commerce sites that do not function as intermediaries for the goods they sell would fall outside the scope of the tax.
• Romania: The withholding tax on dividends will increase on 1 January 2026. The corporate tax rate on dividends paid to resident legal entities will increase from 10% to 16%, although the 10% rate will continue to apply to dividends distributed on the basis of interim financial statements prepared during the 2025 year. The rate of the bank tax—which applies to both Romanian banks and foreign banks with branches in Romania—is temporarily increased for 18 months (i.e., 1 July 2025-31 December 2026). The 2% rate will continue to apply during that period to banks holding a market share of less than 0.2% of total net assets in Romania's banking sector.
• Rwanda: A law passed on 29 May 2025 introduces a digital services tax of 1.5% that is levied on the gross revenue of companies supplying digital services in Rwanda that have a substantial presence in the country. A ministerial order that sets out the scope of taxable digital services, a substantial national presence, the registration declaration and payment requirements is expected in the near future.
• Uganda: Tax measures added to the 2025/26 budget that were signed by the president on 30 June 2025 include the replacement of the 5% digital services tax with a 15% withholding tax on income derived by nonresidents from the provision of digital services in Uganda and a three-year income tax exemption for start-up businesses established after 1 July 2025 by Ugandan citizens with investment capital not exceeding UGX 500 million. 
• United Arab Emirates: The Federal Tax Authority (FTA) issued a decision on 16 July 2025 on the requirements for preparing and maintaining audited special purpose financial statements for a tax group. The decision applies retroactively for tax periods starting on or after 1 January 2025.

The FTA has released guidance on the interest deduction limitation rules, which apply when calculating taxable Income.

A new initiative of the Ministry of Finance (MOF) and the FTA aims to mitigate penalties associated with late registration for corporate tax. Following the MOF announcement on 29 April 2025, the administrative penalty of AED 10,000 for failure to timely register for corporate tax will be waived for eligible entities. To qualify, businesses must submit their corporate tax returns or annual declarations within seven months following the end of their first tax period. The FTA will implement processes to reimburse any administrative fines already paid by qualifying entities but they have not yet specified the full scope of application of the measures.

On 25 June 2025, the MOF released guidance on the mutual agreement procedure (MAP) in tax treaties to provide clarity and direction to taxpayers on eligibility for the MAP, the MAP process and the information needed to make a MAP claim. The MAP provides taxpayers with the possibility to seek relief from (economic) double taxation under an applicable tax treaty. The guidance provides clarity to taxpayers on the scenarios where double taxation may arise such as a tax assessment resulting in a cross-border transfer pricing adjustment or the determination of the existence of a cross-border permanent establishment and further clarifies the timelines in which taxpayers must make a MAP claim.