Global Updates – January 2025

Argentina: The minimum and maximum basis for calculating employee social security contributions increased to a monthly salary of ARS 87,432.81 and ARS 2,841,525.42 respectively from December 1, 2024.

The Argentine National Social Security Administration (“ANSES”) through Resolution No.1122/2024 dated November 21, 2024, effective from December 1, 2024, increased the minimum basis for an employee’s social security contributions from ARS 82,287.12 to ARS 87,432.81, and maximum basis from ARS 2,674,292.72 to ARS 2,841,525.42. These bases are used for the computation of employees’ portion of social security contributions.

Implication:
Companies will need to compute employees’ social security contributions according to the latest base values published.

Australia

Australia: Australia introduced public country-by-country reporting (“CbC”) requirements effective for the financial year beginning on or after July 1, 2024.

On November 29, 2024, the Australian Parliament passed the “Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024”, introducing public Country-by-Country (“CbC”) Reporting. The legislation received royal assent on December 10, 2024, and its requirements are effective for financial years beginning on or after July 1, 2024.

Australia’s public CbC regime applies to multinational enterprises with a global consolidated turnover of AUD 1 billion or more and Australian-sourced income of AUD 10 million or more. This includes Australian-headquartered groups and foreign MNEs with significant Australian operations. The public CbC report must be submitted within 12 months after the end of the relevant reporting period.

The parent entity subject to public CbC reporting requirements must disclose its own legal name, the names of all entities within the CbC reporting group and a description of the group’s approach to taxation. Specific information must also be reported on a CbC basis for Australia and any specified jurisdictions, while data for other jurisdictions can be disclosed either on a CbC basis or in an aggregated basis.

The specific public CbC reporting information to be reported for Australia, any specified jurisdiction and other jurisdiction includes:

Name of the jurisdiction
A brief description of activities:
Number of employees
Net turnover (including related-party turnover)
Profit or loss before tax
Tax accrued
Tax paid

If the public CbC reporting parent chooses to report on a CbC basis for all jurisdictions where the group operates in, it is not required to publish any information on an aggregated basis. if the reporting is done on a CbC basis only for Australia and specified jurisdictions, the parent must publish information for all other jurisdictions on an aggregated basis. The public CbC reporting information must be published on an Australian government website. In certain cases, the Australian Taxation Office (“ATO”) may grant exemptions from disclosing some or all information, either on a class or entity basis.

Failure to comply with the public CbC reporting requirements can result in penalties of 2,500 Commonwealth Penalty Units, which currently equates to AUD 825,000.

Implication:
Multinational groups meeting the qualifying criteria are required to comply with public CbC reporting requirements in Australia for the financial year commencing on or after July 1, 2024.

Australia: Australia Global Minimum Tax law received royal assent on December 10, 2024, and effective from January 1, 2024.

On November 26, 2024, the Australian Senate approved the “Taxation (Multinational – Global and Domestic Minimum Tax) Imposition Bill 2024”, which received royal assent on December 10, 2024, becoming Act No. 133 of 2024. This legislation introduces the imposition of Pillar 2 top-up taxes in Australia, which includes the Australian Domestic Minimum Tax (“DMT”), Australian Income Inclusion Rule (“IIR”) tax, and Australian Undertaxed Profits Rule (“UTPR”) tax. The provisions introduce a 15% minimum effective tax rate for companies that are part of multinational and domestic groups with consolidated revenue of at least EUR 750 million in at least two of the previous four years.

The provisions include:

Qualified Domestic Minimum Top-up Tax (“QDMTT”) – This domestic top up tax of 15% applies to qualifying companies and permanent establishments (i.e., constituent/ member companies of the group) in Australia with an effective tax rate below 15%.
Qualified Income Inclusion Rules (“IIR”) – This is payable by the Australian parent companies (i.e., Ultimate parent entity of the group) with respect to their foreign low-tax constituent/ member companies. The IIR applies to financial years commencing on or after December 31, 2023.
Undertaxed Profits Rule (“UTPR”) – The UTPR generally applies where the jurisdiction/ country of the ultimate parent company of the group has not introduced the provisions of global minimum tax. In such cases, the constituent/ member company in Australia pays the UTPR in respect of foreign low-tax constituent/ member companies i.e., for which the ultimate parent company has not applied equivalent minimum top up tax in its own country in the absence of the regulations. The UTPR will apply to financial years commencing on or after December 31, 2024.
Further, a de minimis exclusion is provided in respect of multinational or national group companies located in a jurisdiction when their aggregate revenues and incomes are less than EUR 10 million and EUR 1 million, respectively, on average over a three-year period. Under the exception, the top up tax is presumed to be zero.
The transitional simplification regimes also apply in the first three years of validity of the rules (tax periods beginning on or before December 31, 2026, to June 30, 2028), and the taxpayers can elect to apply the OECD’s temporary safe harbor based on country-by-country (“CbC”) reporting.

The filing/ compliance obligations that are due within 15 months (within 18 months only in the first year) from the end of the financial year include the following –

Top up tax information return – It is based on OECD’s Global Information Return (“GIR”). It’s required to be filed by every constituent/ member company or one designated constituent/ member company in Australia.
Foreign lodgement notification – This is the notification requirement for foreign entities (i.e., every constituent/ member company or one designated constituent/ member entity in Australia) involved in the filing of the GIR and must be completed within the same deadlines as the GIR.
Annual top-up tax payment and return – These are actual returns for top-up taxes such as QDMTT return (“QDMTR”), or Australian return for QIIR or UTPR (“AIUTR”).

Implication:
Businesses should take note of the above changes and comply with them accordingly.

Belgium

Belgium: Mandatory B2B e-invoicing to be effective from January 1, 2026

On February 1, 2024, the Belgian parliament passed a law to make e-invoicing mandatory for business-to-business (“B2B”) transactions effective from January 1, 2026. However, the B2B e-invoicing framework is still awaiting EU’s approval.

The e-invoicing obligation is applicable to all Belgian VAT registered entities (i.e., entities incorporated in Belgium and fixed establishments of foreign entities). The framework mandates businesses to issue invoices in a structured, standardized electronic format via the PEPPOL network, following the PEPPOL-BIS guidelines, to ensure efficiency, compliance, and cross-border compatibility. The entities would have the flexibility to use other platforms and standards, as long as they comply with the European standard.

Implication:
Businesses should prepare their systems in order to be ready for new compliance requirements once the law becomes applicable.

Brazil

Brazil: Minimum monthly wages increased to BRL 1,518 from BRL 1,412 with effect from January 1, 2025.

Through Presidential Decree number 12,342/2024 published in the official gazette dated December 31, 2024, the Brazilian government increased the minimum monthly wages to BRL 1,518 from BRL 1,412 with effect from January 1, 2025.

The minimum wages are used for computation of salaries and social security contributions of employees etc.

Brazil: Revises social security contribution table for 2025.

The Brazilian Government has set out social security contribution table (i.e., effective from January 1, 2025), which is as follows:

For the year 2025		For the year 2024
Salary range (amounts in BRL)	Social Security Employee’s Contribution Rate	Salary range (amounts in BRL)	Social Security Employee’s Contribution Rate
0 – 1,518	7.5%	0 – 1,412	7.5%
1,518.01 – 2,793.88	9%	1,412.01 – 2,666.68	9%
2,793.89 – 4,190.83	12%	2,666.69 – 4,000.03	12%
4,190.84 – 8,157.41	14%	4,000.04 – 7,786.02	14%
8,157.42 and more	Capped at BRL 951.63	7,786.03 and more	Capped at BRL 908.85

Implication:
The employers need to take into account these changes while processing payroll of the employees.

Brazil: Global Minimum Tax introduced through Law No. 15,079/24 effective from January 1, 2025.

On December 30, 2024, Brazil enacted Bill No. 3,817/24 (now Law No. 15,079/24), implementing the Organization for Economic Cooperation and Development (“OECD”)’s Pillar Two Global Minimum Tax and introducing the global anti-base erosion (“GloBE”) regulations.

The provisions apply to multinational groups having consolidated annual revenues of at least EUR 750 million for at least two of the four preceding fiscal years.

The Law establishes a minimum effective tax rate of 15% by introduction of an additional charge on the social contribution on net profits (“Contribuição Social sobre o Lucro Líquido/ CSLL”).

Social contribution on net profits (“CSLL”) is a social contribution which funds the social security system in Brazil. It is calculated on net profits before income tax, after adjusting the non-deductible items. It is a type of surcharge on corporate income tax (“IRPJ”) at 9% on net profits.
The Law is effective from January 1, 2025, and further regulations will introduce Income Inclusion Rule (“IIR”) in accordance with the OECD GloBE guidelines and new controlled foreign corporations (“CFC”) regime.

Implication:
Businesses should take note of the above changes and comply with them accordingly.

Brazil: President approves and sanctions Complementary Law No. 214/2025 regulating indirect tax reforms.

The Brazilian Government has enacted the Constitutional Amendment No. 132/2023 on December 21, 2023, which introduces major indirect tax reforms in the country. The supplementary law was to be presented by the Executive Branch of the Brazilian Government within 180 days from the approval of the Constitutional Amendment Law for implementing the new indirect tax reforms.

Accordingly, the Brazilian Government has approved and sanctioned Complementary Law No. 214/2025 (previously ‘Complementary Bill of Law No. 68/2024’ (“PLP 68” or the “Bill”) on January 16, 2025, containing regulations required for implementing the new indirect taxes. The transition to the new system starts from January 1, 2026.

As reported in our April 2024 newsletter, the tax reform introduces a dual value added tax (“VAT”) system, which consolidates 5 taxes namely:

the social contributions on gross revenues (“PIS and COFINS”);
Federal Excise Tax on industrial products (“IPI”);
State Sales Tax levied on the supply of goods, rendering of communication services, interstate and intermunicipal transportation services (“ICMS”); and
Municipal Service Tax (“ISS”).

PIS, COFINS and IPI will be replaced by the contribution on goods and services tax (“CBS”) which will be levied/managed at Federal Level and ICMS and ISS will be replaced by goods and services tax (“IBS”) which will be levied/ managed at state/ municipal level.

Additionally, a new federal selective tax/ Excise Federal Tax (“Imposto Seletivo – IS”) will be introduced for goods and services considered harmful to health and the environment.

The new indirect taxes will be introduced in phases beginning in 2026 along with the reduction and removal of the old taxes gradually and ending in 2033.

Implication:
The taxpayers need to keep themselves abreast of these developments related to major indirect tax reforms and various implementation timelines.

Bulgaria

Bulgaria: Increase in minimum wage from BGN 933 to BGN 1,077 effective from January 1, 2025

The Bulgarian Ministry of Labor and Social Policy on October 23, 2024, announced an increase in the monthly minimum wage by 15.4% from BGN 933 to BGN 1,077, effective from January 1, 2025.

Bulgaria: Thresholds for arrivals and dispatches under Intrastat system revised for 2025.

The Bulgarian Government has amended the thresholds for arrivals and dispatches under the Intrastat system for the year 2025. The revised thresholds are as follows:

Arrivals: BGN 1.7 million (previously BGN 1.65 million)
Dispatches: BGN 2.2 million (previously BGN 1.9 million)

Along with the above changes in thresholds, the revised thresholds for declaring the statistical value have also been announced for the year 2025, which are as follows:

Intra-EU arrivals: BGN 17 million (previously BGN 16 million)
Intra-EU dispatches: BGN 36.1 million (previously BGN 37.2 million)

Implications:
Businesses should adjust their reporting in line of new thresholds.

Canada

Canada: Canada and Quebec’s social security contribution rates and maximum bases for 2025 announced. (i.e., January 1, 2025, to December 31, 2025).

Employers are mandated to contribute towards social security, which includes contributions to the Pension Plan and Employment Insurance (“EI”) premiums. The government has confirmed rates and maximum bases for pension plan contribution and EI premium for the year 2025, for Canada and province of Quebec, which are as follows:

Social Security Contributions	For the Year 2025 (January 1, 2025, to December 31, 2025)			For the Year 2024 (January 1, 2024, to December 31, 2024)
	Maximum pensionable salary	Contribution (in %)		Maximum pensionable salary	Contribution (in %)
	(In CAD)	Employer	Employee	(In CAD)	Employer	Employee
Canada Pension Plan (“CPP”)	71,300	5.95%	5.95%	68,500	5.95%	5.95%
Second additional Canada Pension Plan contribution (“CPP 2”)	81,200	4.00%	4.00%	73,200	4.00%	4.00%
Quebec Pension Plan (“QPP”)	71,300	6.40%	6.40%	68,500	6.40%	6.40%
Second additional Quebec Pension Plan contribution (“QPP 2”)	81,200	4.00%	4.00%	73,200	4.00%	4.00%
Canada Employment Insurance (“EI)”	65,700	2.296%	1.64%	63,200	2.324%	1.66%
Quebec Employment Insurance (“EI”)	65,700	1.83%	1.31%	63,200	1.85%	1.32%

Implications:
Employers need to make note of these changes for calculating the social security contributions and payroll for the year.

Canada: Quebec brings changes to the requirement of providing a medical certificate for a sick leave by the employees effective from January 1, 2025.

In Quebec, ‘Bill – 68 – An Act mainly to reduce the administrative burden of physicians’ received royal assent on October 9, 2024. The Bill amends certain provisions of the Act respecting Labour Standards (“ALS”) relating to requirement of medical/ sick leave certificate from employees in certain situations which are effective from January 1, 2025.

Previously, as per the provisions of ALS the employer could request a supporting document for any absence from work if the absence was of repetitive nature. Now, as per the Bill – 68, the employer does not need to request a supporting document for the first 3 instances within a 12-month period in respect of the employee’s sick leave of upto 3 consecutive days. If the employees’ absence is for a period exceeding 3 consecutive days, the employer can request for a supporting document. Employees are still required to inform the employer as soon as possible about their absence from work and the reason for it.

Similarly, as per the current provisions of ALS, the employee can remain absent from work up to 10 days per year due to family reason such as for taking care of health or education of the employee’s children, and the employer can request for a supporting document from the employee for justifying the reason of absence. Now, as per the Bill – 68, employers cannot request for a medical certificate from employees.

Implication:
The businesses should note the changes and accordingly review and modify their leave policies requiring medical certificates/ supporting documents from the employees.

Canada: Ontario enacts Bill 229 introducing new leaves.

The Ontario Government on November 27, 2024, introduced Bill 229 – Working for Workers Six Act, 2024 (“Bill 229”) amending certain provisions of Employment Standards Act, 2000 (“ESA”) which received royal assent on December 19, 2024. As per the amendments, two new leaves are introduced.

Child placement leave – The unpaid leave of 16 weeks can be availed by the employees employed for minimum 13 weeks and have adopted a child or have a child through a surrogacy. The period of 16 weeks can be split between employee parents in respect of the same child. The employee can take leave six weeks prior to the expected placement date. This leave will be in force from a date to be proclaimed by Lieutenant Governor of Ontario.
Long-term illness leave – The unpaid leave of 27 weeks can be availed by the employees employed for minimum 13 weeks who are unable to carry out work due to serious medical condition, whether chronic or episodic. The leave can be availed by the employees by providing a certificate from a licensed physician/ registered nurse/ psychologist confirming the serious condition. This leave will come into force six months from the date on which royal assent is received for Bill 229 (i.e., June 19, 2025)

Implication:
The businesses will need to update/revise the HR policies, leave policies as per the new amendments.

Canada: Federal and certain provincial income tax slabs increased for 2025.

Effective from January 1, 2025, the federal and certain provincial income tax slabs for Ontario, British Columbia and Quebec are increased, while the tax rates are unchanged.

Federal:

Financial Year 2025		Financial Year 2024		2025 & 2024
Taxable Income Thresholds (in CAD)	Constant (in CAD)	Taxable Income Thresholds (in CAD)	Constant (in CAD)	Tax rate
Up to 57,375	0	Up to 55,867	0	15%
57,375.01 to 114,750	3,156	55,867.01 to 111,733	3,073	20.5%
114,750.01 to 177,882	9,467	111,733.01 to 173,205	9,218	26%
177,882.01 to 253,414	14,803	173,205.01 to 246,752	14,414	29%
253,414.01 and above	24,940	246,752.01 and above	24,284	33%

Ontario:

Financial Year 2025		Financial Year 2024		2025 & 2024
Taxable Income Thresholds (in CAD)	Constant (in CAD)	Taxable Income Thresholds (in CAD)	Constant (in CAD)	Tax rate
Up to 52,886	0	Up to 51,446	0	5.05%
52,886.01 to 105,775	2,168	51,446.01 to 102,894	2,109	9.15%
105,775.01 to 150,000	4,294	102,894.01 to 150,000	4,177	11.16%
150,000.01 to 220,000	5,794	150,000.01 to 220,000	5,677	12.16%
220,000.01 and above	7,994	220,000.01 and above	7,877	13.16%

British Columbia:

Financial Year 2025		Financial Year 2024		2025 & 2024
Taxable Income Thresholds (in CAD)	Constant (in CAD)	Taxable Income Thresholds (in CAD)	Constant (in CAD)	Tax rate
Up to 49,279	0	Up to 47,937	0	5.06%
49,279.01 to 98,560	1,301	47,938 to 95,875	1,266	7.70%
98,560.01 to 113,158	4,061	95,876 to 110,076	3,950	10.50%
113,158.01 to 137,407	6,086	110,077 to 133,664	5,920	12.29%
137,407.01 to 186,306	9,398	133,665 to 181,232	9,142	14.70%
186,306.01 to 259,829	13,310	181,233 to 252,752	12,948	16.80%
259,829.01 and above	22,924	252,753 and above	22,299	20.50%

Quebec:

Financial Year 2025		Financial Year 2024		2025 & 2024
Taxable Income Thresholds (in CAD)	Constant (in CAD)	Taxable Income Thresholds (in CAD)	Constant (in CAD)	Tax rate
Up to 53,255	0	Up to 47,937	0	14%
53,256 to 106,495	2,662	51,781 to 103,545	2,589	19%
106,496 to 129,590	7,987	103,546 to 126,000	7,766	24%
129,591 and above	10,255	126,001 and above	9,971	25.75%

Implication:
Employers and employees need to take into consideration the updated income tax brackets for calculating income tax liability accordingly.

Canada: Ontario government published Regulations 477/24 prescribing information to be provided by the employers to the employees before starting the employment, effective July 1, 2025.

Bill – 79, Working for Workers Act, 2023 (“Bill 79”) authorized the Ontario Government to make regulations regarding information to be provided to “employees and prospective employees” related to rates of pay, work location and hours of work. The Ontario Government published the said regulations on November 29, 2024, viz. Regulation 477/24 – When Work Deemed to be Performed, Exemptions and Special Rules (the “Regulations”).

As per the Regulations, effective from July 1, 2025, employers having 25 or more employees must provide to its employees following information in writing before their first day of work:

Legal name of the employer;
Business name of the employer, if the legal and business name are different;
Contact details of the employer, such as address, telephone number etc;
Location or details of the place from where the employee will work;
Employee’s wage rate;
Pay period and pay day;
Details about employee’s anticipated hours of work.

Implication:
The businesses need to take note of the changes and accordingly, review their hiring practices, as also provide the employment related information to the employees.

Canada: Bills 149 and 190 amend some provisions of Ontario’s Employment Standards Act, 2000 relating to pay transparency and job posting requirements effective from January 2026

The Working for Workers Four Act (“Bill 149) and Working for Workers Five Act, 2024 (“Bill 190”), amending certain provisions of Ontario’s Employment Standards Act, 2000 (“the ESA”) came into effect on March 21, 2024, and October 28, 2024, respectively. The above acts contain some changes related to employers having 25 or more employees and posting job vacancies through public advertisement, which were to be effective at a future date, the date is now notified as January 1, 2026. The key changes are as under:

Applicability: The provisions relating to publicly advertised job postings apply to employers having 25 or more employees.
Pay transparency: Employers posting job vacancies through public advertisement need to disclose the salary or the salary range offered for the vacancy advertised. However, the requirement does not apply if the job posting is for a position having a salary range of more than CAD 200,000 annually.
Informing the applicants: The employer must covey in writing about the hiring decision within 45 days from the interview date to the applicant.
Canadian work experience disclosure prohibition: Employers in case of job vacancies posted through public advertisement, should not require, or ask for disclosure of any information relating to Canadian work experience of the job aspirants.
Record retention: The employers need to retain and keep record of every publicly advertised job posting for 3 years from the date on which the posting is removed.
Usage of Artificial Intelligence (“AI”): Employers need to issue a statement on the use of AI in the recruitment processes such as screening, assessment, or selection stages for a publicly advertised job posting.

Implication:

The businesses should note these developments and follow it for posting and advertising job vacancies.

Chile

Chile: Chile enacts the personal data protection law aligning with EU GDPR standards.

On December 13, 2024, Chile published the Law No. 21.719 in the Official Gazette amending Personal Data Protection Law, 1999. The Law will come into force after 24 months of its publication in the Official Gazette (December 1, 2026). The amended law is based on the European Union (“EU”) GDPR principles and provides new obligations for data controllers and additional rights made available to data subjects. The salient features of this law are covered in our October 2024 Global Updates.

Implication:
Employers are required to take note of the new provisions, take necessary steps to implement it by making changes in the internal policies, processes, agreements, etc.

China

China: Statutory paid holiday entitlement increased from 11 to 13

Starting from January 2025, the employees will be entitled to 13 statutory paid holidays leaves instead of 11. This increase follows the ‘Decision of the State Council on Amending the Measures for the Holidays of National Festivals and Memorial Days’, issued on November 10, 2024. The holiday for Spring Festival (Chinese New Year) and Labour Day will each be extended by one day, increasing from three days to four days and one day to two days, respectively.

Implication:
Employers should update their internal policies and HR handbook or manuals accordingly.

China: Nationwide Implementation of fully digitalized e-fapiao effective from December 1, 2024

The China’s State Taxation Administration (“STA”), on November 24, 2024, declared the official nationwide implementation of fully electronic invoices (e-fapiao) vide STA Announcement No. 11 of 2024. Effective from December 1, 2024, the STA has expanded the use of the digitalized electronic invoices across the entire country, after successful implementation of the pilot program in several provinces during the period from 2022 to 2023. Each digital invoice will have a unique number having 20 digits which will include codes for calendar year, regional code for provincial authority, insurance channel and sequential code.

Additionally, to promote the adoption of electronic invoices, the STA intends to establish a unified national electronic invoice service platform, offering free services for the issuance and management of digital invoices. The new electronic version of VAT invoice has the same legal effect as the paper VAT invoices.

Implication:
Businesses should proactively prepare and establish a robust policy for e-fapiao to minimize operational risks and maximize the advantages of the e-invoicing system.

China: New Company Registration Measures effective from February 10, 2025

On December 20, 2024, the State Administration for Market Regulation (“SAMR”) announced the “Company Registration Management Implementation Measures” through Order No. 95, to be effective from February 10, 2025. These measures aim to implement the revised Company law and standardize the company registration management, capital contribution management, and optimize the business environment.

The following are the key provisions:

Time limit for payment of increase in registered capital: If a limited liability company (“LLC”) increases its registered capital, the shareholders would be required to make full payment of the new capital within five years from the date of registration of the change. This timeline is in line with the revised time limit set to make the payment of the initial subscribed capital introduced in the revised company law. A joint stock company is required to fully pay the increased capital before registering the change.
Limitation on adjustment of capital payment period: For LLCs registered before June 30, 2024, if their remaining period for paying subscribed capital is less than five years as of July 1, 2027, or it is already paid, they are exempt from adjusting the capital payment period.
Review of the authenticity and rationality of the company’s registered capital: The new measures grant the company registration authority the powers to conduct a comprehensive assessment of companies in the following cases:
- the subscription period is more than 30 years;
- the registered capital is RMB 1 billion or more;
- other circumstances that are inconsistent with objective.

If the company registration authority finds that a company’s contribution period or registered capital is clearly irregular and violates principles of authenticity and rationality, it will require the company to make prompt adjustments as per the legal requirements.
Disclosure of the registered capital information: The companies shall disclose the details related to capital for the public through the National Enterprise Credit Information Publicity System within twenty working days from the event date. The disclosure includes amount of subscribed and paid-up capital, method of contribution and date of payment in case of LLCs. The disclosure in case of joint stock companies additionally includes the numbers of share subscribed by the promoters.
Verification of the domicile or registered office of company: When registering a domicile or business place, companies generally need to provide proof of legal use of the business premises. However, if ownership or usage rights can be verified through inter-departmental data sharing, the registration authority may waive the requirement to submit proof.
Conditions for rejection of company registration or filing: The company registration authority will not process the registration of establishment or changes thereof, if the following conditions apply:
- the company name does not comply with name registration rules;
- the registered capital, shareholder contributions, or periods are clearly abnormal, and the company refuses adjustments;
- company fails to obtain license/approvals for the businesses which need prior approval;
- person accountable for false registration applies again within three years after registration is revoked;
- if the registration can endanger national security or public interests;
- Any other condition which violates law.

Details of the directors acting as members of the audit committee: As per the measures, the company must record the information of those directors who act as the members of audit committee.
Appointment of liaison officer: When the company is incorporated, the company must appoint a person as liaison officer of the company in accordance with the law and report his details to the company registration authority. Any person who is company’s legal representative directors supervisors, senior managers, shareholders, or employees, can be appointed as the liaison officer. He shall be responsible for effective communication. Change in the liaison officer must be intimated to the company registration authority within 30 days of the change.
Removal of director, supervisor, and senior manager: If a director, supervisor, or senior manager is found to fall under any of the circumstances outlined in Article 178 of the revised Company Law, the company must remove them from their position within 30 days of becoming aware of the situation. Additionally, the company must notify the company registration authority of the removal within 30 days. Article 178 specifies the conditions under which an individual is prohibited from serving as a director, supervisor, or senior manager of a company which includes situations such as being sentenced for criminal offence, bankruptcy, etc.

These measures apply to the registration and management of foreign-invested companies, as well. However, if there are specific provisions in laws or administrative regulations related to foreign investment that differ, those provisions will take precedence.

Implication:
Companies should study these measures and their impact. Companies should take steps to align their process and be compliant with requirements of reporting, capital payment timelines, requirement regarding liaison officer, etc.

China: New Value Added Tax law enacted; to be effective from January 1, 2026

The Standing Committee of the 14th National People’s Congress (“NPC”) passed the new Value Added Tax (“VAT”) law on December 25, 2024, followed by the president’s approval through Order No. 41. The new VAT law will come into force from January 1, 2026, replacing the existing VAT regulations which are in place since last 30 years.

Following are key highlights of the new VAT law:

The existing three tier VAT rate system of 13% (for general sales and import of goods), 9% (for sale of services), and 6% (for modern services) will continue without any changes.
The taxable transactions include sales of goods, services, intangible assets, immovable property, and imports of goods. Unlike the existing regulations, the new law specifically distinguishes the sale of financial products as a separate category from the sale of services.
China’s new VAT law aligns more closely with international practices by refining rules for cross-border transactions. It emphasizes the “place-of-supply” principle, ensuring that VAT is applied in the jurisdiction where the goods or services are actually consumed or used, rather than where they are supplied.
Under the new VAT Law, taxable sales revenue is broadly defined to include not only cash payments, but also non-monetary benefits received from taxable transactions. The new VAT law clarifies that sales revenue refers to the total consideration received, whether monetary or non-monetary, while excluding VAT already calculated as per the defined calculation methods. This ensures a more comprehensive and standardized approach to defining taxable income.
The “Deemed Sales” is renamed as “deemed taxable transaction” and revised to apply only to three basic transactions namely:
- goods used for collective welfare or personal consumption;
- transfers of goods by taxpayers without consideration; and
- transfers of intangible assets, real estate, or financial products by taxpayers without consideration.

Usually, a taxpayer must pay VAT if the total output VAT exceeds the total input VAT during a taxable period. However, under the new VAT law, if the input VAT is greater than the output VAT for the period, the taxpayer has two options, either carry forward the excess input VAT to the next period for future deduction or apply for a refund of the excess amount.
Regarding credit for input VAT under the new VAT law on food and beverage services, daily services for residents and entertainment services, if they are purchased and directly used for consumption, then input credit is not available. Thus, if these services are used for business consumption and not personal consumption, then input credit can be claimed.
Under the new VAT law, the applicable tax rate for mixed sale transactions is determined by the main component of the specific transaction rather than the taxpayer’s primary business activity. This allows taxpayers to apply different VAT rates for different mixed transactions, depending on how each transaction is structured. A mixed sale transaction is defined to be a taxable transaction that involves different tax rates.
The new VAT Law simplifies tax administration by reducing the number of tax filing periods, eliminating the shorter durations of 1-day, 3-day, and 5-day periods that exist under the old regulations. Additionally, while the current regulations lack a defined timeline for filing VAT declarations on imported goods, the new VAT Law specifies that such filings must adhere to the timeline set by Customs authorities, ensuring clearer and more consistent procedures.

Implication:
With the upcoming changes to VAT rules and compliance requirements, businesses should proactively review their existing processes and internal systems. They should take necessary actions to make necessary corrections to bridge the gap.

Colombia

Colombia: Increases adjusted tax value unit (UVT) to COP 49,799 from COP 47,065 effective from January 1, 2025.

On December 4, 2024, the Colombian tax authority (“DIAN”) issued the Resolution No. 000193, establishing the adjusted tax value unit (“Unidad de Valor Tributario – UVT”) for 2025. The UVT value for 2025 is set at COP 49,799, an increase from the 2024 value of COP 47,065.

The UVT is utilized in several Colombian tax regulations, such as tax penalties, individual income tax brackets, and transfer pricing documentation thresholds, including the Local file, Master file, and Country-by-Country reporting. It is annually adjusted based on the accumulated variation in the retail price index. The new value will be mandatory for calculating taxes and other related concepts starting January 1, 2025.

Implication:
Employers and employees must make a note of the increased UVT value for the purpose of tax applications for the year 2025.

Colombia: Colombia increases its minimum monthly wages to COP 1,423,500 from COP 1,300,000 effective from January 1, 2025.

Through Decrees 1572 and 1573 of 2024 dated December 26, 2024, the Colombian Government increased the minimum monthly wages to COP 1,423,500 from COP 1,300,000 effective from January 1, 2025.

Costa Rica

Costa Rica: Increase in the minimum wages effective from January 1, 2025.

Effective from January 1, 2025, the National Wage Council, through Executive Decree No. 44756-MTSS published in La Gaceta No. 232 on December 10, 2024, has approved a 2.37% (1.83% in 2024) increase in the minimum wage for all salaried categories in the private sector.

Costa Rica: Costa Rica’s Tax authority publishes tax rates and slabs for the tax year 2025.

The Ministry of Treasury has announced the updated income tax rates and income slabs for corporates and individuals vide Executive Decree No. 44772-H, published in the Official Gazette on December 3, 2024, effective from January 1, 2025.

Corporate Income Tax
Corporate tax rate is 30%. However, companies having annual gross income up to CRC 119,629,000 (CRC 120,582,000 in 2024) will be subject to the following corporate tax rates:

2025 Annual Income (in CRC)	2024 Annual Income (in CRC)	2025 & 2024 Tax Rates
Up to 5,642,000	Up to 5,687,000	5%
From 5,642,001 to 8,465,000	From 5,687,001 to 8,532,000	10%
From 8,465,001 to 11,286,000	From 8,532,001 to 11,376,000	15%
From 11,286,001 to 119,629,000	From 11,376,001 to 120,582,000	20%

Employed Individuals

Tax rates and slabs for employed individuals based on monthly salary are as below:

2025 Annual Income (in CRC)	2024 Annual Income (in CRC)	2025 & 2024 Tax Rates
Up to 922,000	Up to 929,000	Nil
From 922,001 to 1,352,000	From 929,001 to 1,363,000	10%
From 1,352,001 to 2,373,000	From 1,363,001 to 2,392,000	15%
From 2,373,001 to 4,745,000	From 2,392,001 to 4,783,000	20%
From 4,745,001 and above	From 4,783,001 and above	25%

The income tax slabs and rates are different for self-employed individuals, which are not given above.

Implication:
Employers should take note of the updated income tax slabs while processing the payroll.

Cyprus

Cyprus: Cyprus House of Representative approved implementation of global minimum tax on December 12, 2024, which is effective from January 1, 2024.

The Cyprus House of Representatives approved the bill “The Global Minimum Tax Assurance for Multinational Enterprise Groups and Large-Scale Domestic Groups in the Union Act of 2024” on December 12, 2024, transposing the EU Minimum Tax Directive (Council Directive (“EU”) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union) into law and effective from January 1, 2024. The provisions introduce a 15% minimum effective tax rate for companies that are part of multinational and domestic groups with consolidated revenue of at least EUR 750 million in at least two of the previous four years.

The provisions include:

Qualified Domestic Minimum Top-up Tax (“QDMTT”) – This domestic top up tax of 15% applies to qualifying companies and permanent establishments (i.e., constituent/ member companies of the group) in Cyprus with an effective tax rate below 15%.
Qualified Income Inclusion Rule (“IIR”) – This is payable by the Cyprus parent companies (i.e., Ultimate parent entity of the group) with respect to their foreign low-tax constituent/ member companies. The IIR applies to financial years commencing on or after December 31, 2023.
Undertaxed Profits Rule (“UTPR”) – The UTPR generally applies where the jurisdiction/ country of the ultimate parent company of the group has not introduced the provisions of global minimum tax. In such cases, the constituent/ member company in Cyprus pays the UTPR in respect of foreign low-tax constituent/ member companies i.e., for which the ultimate parent company has not applied equivalent minimum top up tax in its own country in the absence of the regulations. The UTPR will apply to financial years commencing on or after December 31, 2024.
The transitional simplification regimes also apply such as transitional CbCr and UTPR safe harbors.

The filing/ compliance obligations include the following –

Top up tax information return – It is based on OECD’s Global Information Return (“GIR”). It’s required to be filed by every constituent/ member company or one designated constituent/ member company in Cyprus within 15 months (within 18 months only in the first year) from the end of the financial year.
Annual top-up tax payment and return – This is actual return of top-up tax such as QDMTT, IIR or UTPR, which is required to be filed in Cyprus within 30 days after 15 months from the end of the financial year.

Implication:
The companies meeting the prescribed thresholds need to take note of these changes.

Cyprus: Maximum insurable earnings for social insurance contribution increased from EUR 62,868 to EUR 66,612 with effect from January 1, 2025.

Effective from January 1, 2025, the maximum insurable earnings as per the Social Insurance Law of 2010, is increased from EUR 62,868 to EUR 66,612 per annum for 2025. Maximum insurable earnings refer to the highest amount of income up to which individuals or entities are required to pay contributions or premiums for insurance programs. This limit is often set by government or insurance authorities and serves as the cap beyond which contributions or premiums are not required.

Implication:
Employers should take note of the changes in social insurance contributions and update their payroll processes accordingly.

Cyprus: Cyprus increased the Intrastat threshold for arrivals effective from January 1, 2025.

Cyprus increased the threshold for reporting arrivals in the Intrastat return (i.e., intra-community acquisitions of goods) from EUR 320,000 to EUR 350,000, effective from January 1, 2025. The threshold for reporting dispatches remains unchanged at EUR 75,000.

In Cyprus, statistical reports viz. ‘Intrastat returns’ are required to be submitted in respect of the movement of goods across the national borders to or from other EU countries. Intrastat returns list down the goods sent out of Cyprus i.e., ‘dispatches,’ and goods brought into Cyprus i.e., ‘arrivals.’

Intrastat returns are required to be submitted only upon exceeding the reporting thresholds.

Implication:
The businesses will need to follow revised thresholds for submission of Intrastat returns.

Czech Republic

Czech Republic: Increase in VAT registration threshold from January 1, 2025.

On December 23, 2024, Czech Republic published in the Official Gazette amendments to the VAT Law which are effective from January 1, 2025. The registration thresholds are revised. Currently, if the turnover of the taxable person, having an establishment in Czech Republic, within the preceding 12 months is over CZK 2 million, it must register for VAT by 1st day of the second month following the month in which the threshold was exceeded.

As per the amendments, the registration requirement is now based on tracking the turnover in a calendar year, instead of in a consecutive 12-month period. Further, there are two turnover thresholds to monitor and time limits for obtaining registration differ based on these two thresholds, which are as follows:

Turnover threshold in a calendar year (in CZK)	Requirement to register
Exceeds 2,000,000 but not 2,536,500	Register for VAT from January 1 of the following year
Exceeds 2,536,500 (new limit introduced)	Register for VAT from the following day exceeding the turnover limit

Further, amendments are also made implementing the EU small business scheme for cross-border supplies as per EU 2020/285 of February 18, 2020. Accordingly, it is provided that a taxable person from another EU Member State can apply for a small business VAT exemption from registration in Czech Republic, if its annual turnover in Czech Republic is up to the amended VAT thresholds requirement and the total EU turnover does not exceed EUR 100,000.

Implication:
Small, unregistered businesses should keep a track of further developments and obtain registration as necessary.

Czech Republic: Czech Republic abolished guaranteed wages for commercial/ private sector and revised classification of the groups for guaranteed wages for State/ public sector, also increased minimum monthly wages for the year 2025 to CZK 20,800 from CZK 18,900.

In Czech Republic, the national minimum wage is the legal minimum that an employer must pay to its employees for their work, which is set by a government decree every year. For full-time employees, it is on a monthly basis and for employees working on part-time or irregular hours, it is on an hourly basis.

Effective January 1, 2025, the minimum wage is increased to CZK 20,800 from CZK 18,900 per month and the base hourly wage to CZK 124.40 from CZK 112.50 per hour.

Further, in Czech Republic, some professions have guaranteed wages based on the minimum wage and established by collective bargaining agreements. Effective from January 1, 2025, the guaranteed wages for the commercial/ private sector have been abolished, so there are only minimum wages as mentioned above. For the state/ public sector, it remains in force with newly divided 4 groups, instead of currently followed 8 groups. In 2024, there were eight guaranteed monthly wages (i.e. 8 groups) ranging from CZK 18,900 to CZK 37,800.

The table below shows the revised classification of guaranteed wages divided in 4 groups as per the individuals’ level of education achieved and the weekly standard working time for 2025:

Work Group	Education Level	Guaranteed Wage (in CZK)
Work Group	Education Level	Per Month	For 40 hours per week	For 38.75 hours per week	For 37.5 hours per week
1st group	Basic education	20,800.00	124.40	128.50	132.70
2nd group	Secondary education with teaching certificate	24,960.00	149.30	154.20	159.30
3rd group	Secondary education	29,120.00	174.20	179.90	185.90
4th group	Higher education	33,280.00	199.10	205.60	212.40

Implication:
Employers will need to take a note of the changes in wages for the year 2025 and the reclassification of guaranteed wages and modify their payrolls accordingly.

EU

European Union: VAT in Digital Age (“ViDA”) Agreement finalized to implement uniform VAT rules across EU.

On November 5, 2024, the Economic and Financial Affairs Council (“ECOFIN”) of the European Union finalized the agreement of the VAT in the Digital Age (“ViDA”) project, with the aim to digitize the VAT system across EU and simplify the VAT processes. The agreement is proposed to be implemented in phased manner starting in the year 2025 and to be completed by year 2035. The agreement consists of three acts, a directive, a regulation, and an implementing regulation.

ViDA has three pillars namely, digital reporting requirements, platform economy and single VAT registration.

Digital Reporting: The VIDA aims to standardise the e-invoicing process and digital reporting obligation for the cross-border transactions between the different member states of EU. This proposes to replace the reporting compliances like recapitulative statements, in order to streamline the VAT compliance. This will facilitate smooth exchange of the tax information, promote transparency, and reduce tax frauds.
Platform economy: This initiative focuses on improving VAT collection in the platform economy, particularly for short-term accommodation rentals and passenger transport services, by enhancing the role of digital platforms in tax collection, tax reporting and compliance.
Single VAT registration: The e-commerce package will be updated, expanding the One-Stop Shop (“OSS”) to include the supply of electricity, gas, and heat. The existing OSS system allows businesses to manage VAT for cross-border sales within the EU through a single Member State. However, domestic sales within the same Member State still require additional VAT registrations. A single VAT registration system will be implemented, extending the OSS to cover all B2C supplies, stock transfers, and mandatory reverse charge mechanisms. The third pillar proposes a single VAT registration system across the EU, allowing businesses to manage their tax obligations with just one registration.

Member states will be responsible for adopting the new European measures into their national tax laws. Additionally, they will need to put systems in place to audit and ensure the accuracy of electronic invoices exchanged between companies, ensuring compliance with the updated VAT regulations.

Implication:
Businesses should keep track of the further developments and will need to comply with new rules for electronic invoicing as part of the VAT system, whenever they become applicable.

European Union: EU SME scheme expanded to cover cross-border transactions effective January 1, 2025.

Effective January 1, 2025, small enterprises can claim VAT exemptions for goods and services supplied in Member States where they are not established. While the special SME scheme was originally introduced by Council Directive (“EU”) 2020/285, subsequent amendments to this directive have extended the scheme to include cross-border transactions, allowing SMEs to benefit from simplified VAT obligations across multiple Member States.

Earlier, the small enterprises could only benefit from exemption under the SME scheme if they were established in the Member State where the VAT was due. As a result, small enterprises making transactions in Member States where they were not established had to register and comply with the VAT obligations like periodical VAT returns filing, issuing invoices, maintaining accounts for VAT, etc., in each Member State where the VAT was due.

Now the scheme is extended to the cross-border VAT transactions, for small enterprises meeting the following conditions:

total annual turnover in all the Member States should not be more than union annual threshold which is set at EUR 100,000; and
the annual threshold in each Member State where an SME seeks to avail the exemption benefit, must not exceed the national threshold set by each Member State, which cannot be higher than EUR 85,000.

The small enterprise would be required to comply with the below given simplified VAT obligations:

to avail the benefit of the exemption, the small enterprise should be identified by an individual number with the suffix ‘EX’ in their Member State of establishment, after the Member State in which they are not established submits a prior notification to the Member State of establishment;
report for each calendar quarter the total sales made in all the Member States to be filed with the Member State of establishment; and
when the annual turnover threshold of EUR 100,000 is exceeded and thus the conditions to apply the SME scheme are not met, the taxable person shall inform the EU Member State of establishment within 15 working days and report information about the value of its supplies until the date the threshold was exceeded.

This scheme is optional and applies strictly to small enterprises established in the EU Member States.

Implication:
Businesses should evaluate their eligibility for the small enterprises scheme and evaluate its benefits for them.

European Union: Issues Public CbC Reporting format for Member States

On November 29, 2024, the European Union (“EU”) adopted a Commission Implementing Regulation (“EU”) 2024/2952 (the implementing regulation), establishing a common template and electronic reporting format for Member States to use in public country by country reporting (“CbCR”), including detailed Extensible Business Reporting Language (“XBRL”) specifications, the use of Extensible Hypertext Markup Language (“XHTML”), filing requirements, and a taxonomy for reportable data.

The implementing regulation will apply to the financial years starting on after January 1, 2025.

The EU’s public CbCR rules require Ultimate Parent Entities (“UPEs”) to prepare, publish, and make accessible a report on income tax information if their consolidated revenue exceeds EUR 750 million for the last two consecutive financial years. Directive 2013/34/EU had assigned the Commission with creating a common template and electronic formats for these reports, ensuring they are machine-readable for consistency and accessibility.

The implementing regulation includes four annexes that outline the structural details of the new reporting requirements:

Annex I: a common template for Public CbCR to ensure uniformity in the presentation of tax information;
Annex II: specifies the use of XBRL standards for the reporting of financial data;
Annex III: Filing requirements to ensure that they are machine readable and adhere to consistent format;
Annex IV: specifies taxonomy elements that determine the scope of data to be reported, providing clear guidance on the information that must be disclosed.

Implication:
Companies subject to public CBC requirement would be required to use the templates to make necessary reporting and adhere to the requirements laid down thereunder.

Finland

Finland: Amended VAT law increases VAT registration threshold from EUR 15,000 to EUR 20,000, effective from January 1, 2025.

The Finnish Parliament has amended VAT legislation, impacting small businesses, effective January 1, 2025. The important amendments are listed below:

The mandatory VAT registration threshold has increased from EUR 15,000 to EUR 20,000 with effect from January 1, 2025. The businesses with a turnover exceeding EUR 20,000 in the current or preceding year are required to be registered mandatorily while those below the threshold can register voluntarily.
Earlier, small businesses having annual turnover below EUR 30,000 were entitled to VAT relief for small businesses. This scheme is discontinued now.
A new EU small business VAT scheme has been introduced, which will allow the small businesses to access the VAT exemptions across all EU countries, instead of just in Finland. To be eligible for the scheme the turnover in EU should not exceed EUR 100,000. Starting from January 1, 2025, a company established in Finland can submit a prior notification through MyTax to be registered under the new EU VAT scheme. The company is required to notify its total turnover for current and preceding calendar year. Further, details of buyers in Finland and other EU countries (country-wise) also need to be provided. Further a quarterly report disclosing sales to other EU countries should be submitted by the end of second month from the end of relevant quarter.

Implication:
Businesses should check their eligibility and evaluate benefits of new EU small business scheme. Businesses should also note increase in turnover threshold.

France

France: Increased minimum hourly wage by 2% from EUR 11.65 per hour to EUR 11.88 per hour effective from November 1, 2024.

Effective from November 1, 2024, the minimum hourly wages (“gross”) in France have been increased to EUR 11.88 (previously EUR 11.65). Due to the aforesaid increase, the minimum growth wage (“SMIC”) per month (“gross”) in France increased to EUR 1,801.80 (previously EUR 1,766.92).

This 2% increase in November took effect earlier than originally intended, replacing the increase that was scheduled for the start of the following year.

France: Parliament approved Special Finance Bill for 2025 to continue existing tax rules.

The French Parliament approved the Special Finance Bill, 2025 on December 18, 2024, after it failed to approve the draft Finance Bill 2025 which was presented on October 10, 2024, due to fall of the ruling government.

The Special Finance Bill is intended to extend the existing tax rules from 2024 into 2025, maintaining continuity until the new Finance Bill for 2025 is passed. Due to the lack of a new budget for 2025 by the end of 2024, the outgoing French Government presented a Special Bill on December 11, 2024, allowing the 2024 budget to roll over into 2025 and granting authorities the power to levy taxes and borrow funds until the 2025 Finance and Social Security Finance Laws are implemented.

Implication:
Employers and businesses can follow 2024 tax rates until news laws for 2025 are implemented.

France: New social security ceiling effective from January 1, 2025

The Official Bulletin of Social Security, on November 4, 2024, declared 1.6% increase in the annual ceiling, effective from January 1, 2025. The Social Security ceiling represents the maximum remuneration or earnings considered for the calculation of social security rights, specific contributions, and the basis for certain contributions.

As of January 1, 2025, the annual Social Security ceiling (“PASS – Plafond de la Sécurité sociale”) will increase to EUR 47,100, (previously EUR 46,368) and the monthly ceiling will rise to EUR 3,925 (previously EUR 3,864) as compared to 2024.

Implication:
Employers should consider the new ceiling for calculation of social security contributions and other items and update their systems for this change.

Germany

Germany: Changes in maximum income bases and rates for social security contributions for 2025

Social security contribution:
In Germany, contributions to social security include pension insurance, unemployment insurance, health insurance, long-term care insurance, and compulsory insurance, which is shared (generally equally) by employer and employee. Additionally, only the employer needs to contribute towards accident insurance, insolvency insurance and certain other insurance covers.

As per the Ordinance on ‘Social Security Calculation parameters 2025’ approved by the Federal Council on November 6, 2024, certain maximum annual income thresholds and rates are increased effective from January 1, 2025, which are as follows:

Type of Contribution	Region	Amounts in EUR
Type of Contribution	Region	For the Year 2025 (Jan 1, 2025 – Dec 31, 2025)	For the Year 2024 (Jan 1, 2024 – Dec 31, 2024)
Maximum base for pension and unemployment contribution	Western Federal States (Old States)	96,600	90,600
Maximum base for pension and unemployment contribution	Eastern Federal States (New States)	96,600	89,400
Maximum base for health insurance contribution	All States	66,150	62,100
Insolvency contribution rate (Paid only by the employers)	All States	0.15	0.06

Private health Insurance:
As per the Ordinance approved by the Federal Council on November 6, 2024, compulsory insurance limit i.e., income threshold for opting for private insurance is increased to EUR 73,800 per year from EUR 69,300 per year, effective January 1, 2025.

The income threshold for private health insurance is adjusted annually. The employees earning higher than the income threshold, can select between public or private health insurance. The public insurance premium/contribution is part of statutory social security contributions.

Implication:
The employer needs to consider these revised rates and maximum bases of social security contributions for processing the payroll.

Germany: Germany increases minimum wage from EUR 12.41 to EUR 12.82 per hour effective from January 1, 2025.

Effective from January 1, 2025, the minimum wage has been increased from EUR 12.41 to EUR 12.82 per hour.

The minimum wage refers to the legally mandated lowest amount of compensation that an employer is required to pay to employees for their work. The minimum wage is regularly reviewed and adjusted by the Minimum Wage Commission in Germany.

Germany: The Annual Tax Act (“Jahressteuergesetz, JStG”) 2024 enacted, effective from January 1, 2025.

Germany’s Parliament passed “The Annual Tax Act (“Jahressteuergesetz, JStG”) 2024” on November 28, 2024, which was officially promulgated and published in the Federal Gazette on December 5, 2024. This legislation implements numerous updates to German tax law, including changes to corporate tax, personal income tax, foreign tax act and value-added tax (“VAT”) etc. The Act is designed to modernize tax regulations, align with European Union directives, and reflect recent court rulings.

The key changes in the Annual Tax Act (“JStG”) 2024, are generally effective from January 1, 2025, unless and otherwise stated, are as below:

Income tax

Under the Income tax Act, taxpayers must submit electronically the contents of their balance sheet and statement of profit and loss to the tax office in the prescribed format. The requirement is now extended to submission of an unabridged list of account balances from financial years commencing after December 31, 2024, and certain other documents like changes to fixed assets and the underlying register of assets, a management report, audit report, etc. from financial years commencing after December 31, 2027.
Childcare expenses: Currently, two-thirds of childcare costs, up to a maximum of EUR 4,000 per child, can be claimed as special expenses under the German Income Tax Act. As per the amendment, the childcare expenses deduction will increase to 80% of childcare expenses, with the maximum deductible amount raised to EUR 4,800 per child.
Child benefit increase: Child benefit is to be increased by EUR 5, i.e., from EUR 250 to EUR 255 per child per month with effect from January 1, 2025. In Germany, parents receive monthly child benefits (for children below the age of 18) and they can claim child allowance in the tax return.
Adjustment of basic tax-free allowance and child allowance/ deduction: The Act introduces retroactive increase to the basic tax-free allowance and child allowance/ deduction, effective from January 1, 2024. The child allowance/deduction has increased from EUR 3,192 to EUR 3,336 per parent, offering EUR 144 more per parent.

Further, the basic tax-free allowance for individual taxpayers has been raised from EUR 11,604 in 2023 to EUR 11,784 in 2024, providing an additional EUR 180 of tax-free income. For 2025, the basic tax-free allowance will rise to EUR 12,096. The revised tax slabs are as below:

2025 Income (in EUR)	2024 Income (in EUR)	2025 & 2024 Tax Rates
Up to 12,096	Up to 11,784	0%
From 12,097 to 68,480	From 11,785 to 66,760	14% to 42%
From 68,481 to 277,825	From 66,761 to 277,825	42%
Above 277,826	Above 277,826	45%

VAT

In Germany, small businesses having turnover up to EUR 22,000 in the previous year and not expected to exceed EUR 50,000 in the current year are exempted from the VAT registration. Germany has increased these thresholds effective from January 1, 2025. Accordingly, registration threshold for previous year’s turnover has risen from EUR 22,000 to EUR 25,000 and from EUR 50,000 to EUR 100,000 for the forecasted turnover in the current year.
German VAT Act is amended to implement the EU small business scheme for cross-border supplies as per the Council Directive (“(EU) 2020/285”) of February 18, 2020. Accordingly, it is provided that a taxable person from another EU Member State can apply for a small business VAT exemption from registration in Germany, if its annual turnover in Germany is up to the amended VAT thresholds requirement and the total EU turnover does not exceed EUR 100,000.
In Germany, preliminary/ advance VAT returns are filed, generally, on a quarterly basis and final VAT return is filed annually. If the VAT payable for the preceding year exceeded EUR 7,500, preliminary/ advance VAT returns are required to be filed monthly. The threshold for submission of monthly preliminary VAT return is increased from EUR 7,500 to EUR 9,000 per calendar year.
The retention period for VAT-related accounting documents has been reduced from 10 years to 8 years.
The new rules will now apply for determining the place of supply of services for remote events i.e., where the presence of the recipient of such services is virtual and not physical, particularly in cultural, artistic, sports, scientific, educational, or entertainment events. In such cases, the VAT will be applied based on the recipient/ consumer’s location rather than the location of the event. For instance, VAT on online concerts attended by consumers or taxable persons will be collected in the country of the consumer’s residence or the taxpayer’s registered office.
Currently, the place of supply for services is generally the supplier’s registered office for B2C transactions (“Business-to-Consumer”). For B2B transactions (“Business-to-Business”), the place of supply is the recipient’s registered office or fixed establishment. The upcoming change will primarily impact B2C services, shifting the place of supply to the consumer’s location.

Implication:

Businesses should note the above changes and make necessary adjustments to ensure compliance with the revised provisions of income tax, VAT, etc. starting from January 2025.

Germany: Germany introduces key reforms for digital contracts, document retention effective from January 1, 2025.

Germany’s Parliament passed the “Fourth Act to Reduce Bureaucracy for Citizens, Business and the Administration (“Bureaucracy Relief Act IV – BEG IV”) on October 18, 2024, which was officially promulgated and published in the Federal Gazette on October 29, 2024. The new Act includes, among other things, amendments to the Evidence Act. The new legislation introduces significant reforms to reduce administrative burdens, particularly for employers, including simplified documentation and proof requirements for labor laws and other related regulations effective primarily from January 1, 2025.

The key changes are as follows:

Digital employment contracts: Employers can now provide essential terms of employment electronically in text form, such as via email, eliminating the need for handwritten signatures in most cases, except for specific industries like construction or hospitality and fixed-term contracts. The employer must obtain a proof of receipt from the employees upon transmission. If the employee specifically requests written proof of the employment conditions, then the employers are required to provide the information on paper. Further, any changes to the terms and conditions of employment may also be made in text form.

Under the current provisions, employment contracts require a physical copy and wet signatures for contract validation. This amendment to the German Evidence Act facilitates the use of digital employment contracts.
Age Limits in Employment Contracts: The requirement for written documentation of age limits in employment contracts will be removed. Generally, age limits in employment contracts have traditionally been included in certain contexts, such as in relation to retirement age, pension schemes, or eligibility for certain benefits or for workers in certain roles requiring age limit considering physical or mental capacity, etc. However, it should be noted that the age-related clauses are still valid as needed for legal reasons (e.g., pension schemes, retirement age) but will no longer be mandatory to be stated explicitly in the contract in a written form.
Employee Leasing and Commercial Lease Agreements: Under the new provisions, employee leasing contracts can now be concluded in text form, such as via email, simplifying the formal requirements. Employee leasing (also known as temporary staffing) involves an agreement between a lessor (the employment agency) and a lessee (the company utilizing the employees) where workers are employed by the lessor but temporarily assigned to the lessee. Similarly, the requirement for written form in commercial lease agreements has been relaxed, allowing greater flexibility and quicker contract conclusions through electronic means. Previously, commercial leases lasting more than one year had to be concluded in written form, but with the change, agreements can now be concluded in text form, provided they are legible and made on a durable medium, such as email.
Retention periods for accounting documents: The retention period of certain accounting documents (invoices, cost receipts) under commercial law is reduced from ten to eight years, easing the administrative burden on businesses.
Parental Leave Applications: Employees can now submit applications for parental leave and part-time work during parental leave electronically in text form, which are currently required in written form.

Implication:

Employers must update their practices to comply with the new provisions of the Fourth Bureaucracy Relief Act “(BEG IV”), including digital employment contracts, updated document retention periods, and streamlined processes for parental leave and employee leasing contracts, effective from January 2025.

Greece

Greece: Greece sets new thresholds for criteria for categorization of enterprises.

On December 12, 2024, Greece published Law No. 5164/2024 in the Official Gazette amending the criteria set for categorizing entities based on their size for the application of Greek accounting standards. The categories determine the reporting and compliance obligations of the entities in line with Directive 2023/2775/EU. The changes are effective retroactively from January 1, 2024.

The companies must meet the thresholds of at least two of the three criteria below for over two consecutive periods:

Category for Enterprise and Groups	New / Revised Thresholds up to	Previous Thresholds up to
Micro Enterprise
Total Assets (in EUR)	450,000	350,000
Net Turnover (in EUR)	900,000	700,000
Average Number of Employees	10	10
Small Enterprise – (which is not Micro Enterprise)
Total Assets (in EUR)	5,000,000	4,000,000
Net Turnover (in EUR)	10,000,000	8,000,000
Average Number of Employees	50	50
Medium-Sized Enterprise – (which is not Small & Micro Enterprise)
Total Assets (in EUR)	25,000,000	20,000,000
Net Turnover (in EUR)	50,000,000	40,000,000
Average Number of Employees	250	250

When the entity exceeds the thresholds given above for medium enterprise, it is categorized as large enterprise.

The change in classification takes effect from the period immediately following these two consecutive periods.

The same thresholds are set for categorizing consolidated groups and the above criteria are considered on a consolidated basis.

Further, the Law No. 5164/2024 also transposes “Directive 2022/2464/EU” on Corporate Sustainability Reporting Directive (“CSRD”). It mandates sustainability reporting, requiring companies to disclose qualitative and quantitative information based on the environmental, social, and governance (“ESG”) impacts of the company. These reporting obligations apply to large companies already reporting non-financial information (i.e., companies with 500 or more employees) from January 1, 2024. Starting January 1, 2025, it applies to other large companies not previously required to report a (i.e., companies with balance sheet total of EUR 20 million, a turnover of EUR 40 million, or 250 employees). From January 1, 2026, small and medium listed companies (i.e., not qualifying as large company as mentioned above) will also need to comply with it. Finally, by January 1, 2028, non-EU companies with significant operations in the EU (i.e., companies with a turnover of EUR 150 million in the EU and at least one subsidiary or branch in the EU) will also have to follow the reporting obligations.

Implications:
Companies must note the revised thresholds and follow the reporting and compliance obligations accordingly.

Further, the companies must check sustainability reporting requirements applicable to them and make necessary changes in policies, systems, and procedures to ensure timely and complete reporting.

Hungary

Hungary: Increased the monthly minimum wages and guaranteed minimum wages, effective from January 1, 2025.

Effective from January 1, 2025, the Hungarian Government has increased the monthly minimum wage from HUF 266,800 to HUF 290,800 per month. For jobs requiring secondary education or professional qualifications, a monthly guaranteed minimum wage (also known as graduate minimum wages) is increased from HUF 326,000 to HUF 348,800 per month.

India

India: Multi-Factor Authentication (“MFA”) for GST e-invoicing /e-way bill system access to apply to all taxpayers gradually.

On December 17, 2024, Goods and Services Tax Network (“GSTN”) released an advisory titled “Updates to E-Way Bill and E-Invoice Systems,” announcing that the NIC (National Informatics Centre) will roll out updated versions of the e-way bill and e-invoicing systems, with the aim to enhance the security of the portals.

One significant amendment to the e-invoicing system includes the phased implementation of Multi-Factor Authentication (“MFA”) for all taxpayers and users, which is currently limited to taxpayers with a certain Annual Aggregate Turnover (“AATO”). The existing provisions and proposed timelines are as follows:

From August 20, 2023: Mandatory for taxpayers with AATO more than INR 1 billion;
From September 11, 2023: Optional for taxpayers having AATO exceeding INR 200 million;
Starting from January 1, 2025: Mandatory for taxpayer having AATO exceeding INR 200 million;
Starting from February 1, 2025: Mandatory for taxpayer having AATO exceeding INR 50 million;
Starting from April 1, 2025: Mandatory for all taxpayers and users.

MFA requires login using a username, password, and OTP (which is sent to the registered mobile number, Sandes app, or similar platforms).

Implication
Taxpayers should monitor these updates and make necessary adjustments into their compliance processes if they meet the required thresholds.

India: MCA further extends filing deadline for Form CSR-2 for FY 2023-24

The Ministry of Corporate Affairs (“MCA”) has extended the deadline for companies to file Form CSR-2 which is a return regarding corporate social responsibility of the company for the financial year 2023-24. Initially set to an earlier date, the deadline had already been revised to December 31, 2024. However, through the Companies (“Accounts”) Second Amendment Rules, 2024, the timeline has been further extended to March 31, 2025.

The Form CSR-2 is required to be filed separately after filing of Form AOC-4 or Form AOC-4-NBFC (“Ind AS”) with the Registrar of Companies (“ROC”).

Implication:
Companies to which CSR provisions are applicable should note the revised due dates.

Indonesia

Indonesia: KIA law amends provisions relating to maternity leave.

Indonesia on July 2, 2024, enacted ‘Law No 4 of 2024 concerning Mother and Child Welfare in the First 1,000 Days of Life Phase (‘KIA Law’)’ amending some provisions of ‘Law No. 13 of 2003 – Manpower Law.’ The provisions of the KIA Law are effective from July 2, 2024.

Some amendments are as under:

Maternity Leave Entitlements –
Currently, the law grants a female employee right to take 1.5 months’ leave before childbirth and 1.5 months afterwards (extendable without limit based on a doctor or midwife’s recommendation). As per the provisions of the KIA Law, the existing 3 months maternity leave entitlement can be extended by up to 3 more months. The extended leave can be availed for reasons such as maternity-related health issues, postpartum complications or miscarriage, or the birth of a child with a health disorder or medical complication accompanied by doctor’s certificate.
The female employee should not be discriminated on grounds of pregnancy and cannot be terminated during maternity leave. Further, the employers should provide appropriate heath care facilities, daycare facilities and nursing rooms. The female employees can negotiate on flexible working hours during this time.
Maternity pay during extended maternity leave –
As per the KIA Law, female employee availing extended maternity leave is entitled to full pay for the first 4 months of maternity leave and thereafter at 75% of monthly pay for the last 2 months.
Paternity leave entitlements –
Currently, the law grants a male employee right to take paternity leave for 2 days. As per the provisions of the KIA Law, paternity leave can be extended by another 3 days.

Implication:
The employers need to take note of these changes and amend their leave policies relating to maternity and paternity provisions accordingly.

Ireland

Ireland: Ireland grants right to postpone maternity leave, effective from November 20, 2024.

The President has signed the “Maternity Protection, Employment Equality and Preservation of Certain Records Act 2024” (“the Act”) into law on October 28, 2024, which is effective from November 20, 2024, as per the relevant commencement order. The Act introduces a new right to postpone maternity leave in certain circumstances. The key provisions are as follows:

Under the new legislation, employees with a serious health condition can postpone their maternity leave for a period of between 5 weeks to 52 weeks initially, with a second postponement allowed, but the total period cannot exceed one year. This applies when the health condition poses a serious risk to life or health, including mental health, and requires ongoing medical intervention. For mental health conditions, “necessary medical intervention” refers to in-patient hospital treatment. Employees must notify their employer in writing and provide a medical certificate at least two weeks before the postponement.

Currently, there is no provision in Irish law for postponing maternity leave due to health conditions. Maternity leave is a statutory entitlement of 26 weeks, which must be taken within a specified timeframe. Postponement is not permitted unless the condition qualifies as a disability under other sick leave protections.

Implication:
Employers will need to update their maternity leave policies to accommodate the new right to postpone.

Ireland: Ireland introduces amendments to Companies Act, 2014 with key changes on virtual meetings and strike off provisions effective from December 3, 2024.

The President signed “The Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024” into law on November 12, 2024, and provisions are effective from December 3, 2024, as per the relevant commencement order. The Act makes number of amendments to the Companies Act 2014 including those related to hybrid meetings, domestic mergers, more ground to involuntary strike off etc.

Some of the key changes commencing on December 3, 2024, include:

The Act introduces a provision allowing companies to hold and participate in general meetings (AGMs and EGMs) virtually using electronic platforms such as Teams, Zoom, or similar technologies, without the need for a physical venue. This provision, initially introduced as a temporary measure during the Covid-19 pandemic, permitted general meetings to be conducted either wholly or partly by electronic means. Originally set to expire on December 31, 2024, the measure has now been made a permanent feature of the Companies Act 2014, providing companies with continued flexibility in conducting their meetings.
The Act introduces additional grounds for involuntary striking a company off the Register namely:
- Failure to provide confirmation of the company’s registered office – If a company fails to confirm the location of its registered office, either by not notifying the Companies Registration Office (“CRO”) or by failing to update its records with a correct address, it may face the risk of being struck off the Register;
- Failure to appoint a company secretary; or
- Failure to comply with the registration of beneficial ownership information requirements.

Implication:
Businesses should take note of these provisions, ensuring compliance with the new requirements for virtual meetings and other rules to avoid potential issues, such as being removed from the company register.

Israel

Israel: Ministry of Justice announced companies fee rates for 2025.

The Ministry of Justice (“MoJ”) has announced the applicable fee rates for companies for the year 2025.

Particulars	Fees (in NIS)
Reduced annual fee including tax (if paid before March 31, 2025)	1,306
Annual fee (if paid after March 31, 2025) including tax	1,734
Online company registration (reduced fee is applicable for online registration)	2,497
Company registration (except for extractive industries)	3,048

Note: All companies, except those exempted, are required to pay the annual fees to the Registrar of Companies each year except for the first year.

Implication:
Companies must ensure timely fee payments to save costs, maintain compliance, and optimize registration expenses in 2025.

Italy

Italy: Italy’s Budget highlights 2025.

The Italian Budget Law 2025 (“Italian Law No. 207 of December 30, 2024”) was published in the Official Journal (“Gazzetta Ufficiale”) on December 31, 2024. The provisions generally apply from January 1, 2025, unless stated otherwise. Some key changes are as follows:

Personal income tax measures:
- There are no changes announced in the personal income tax. The current tax slabs which are unchanged for 2025 are as below:

Income Slabs for 2025 (EUR)	Tax Rate
Up to 28,000	23%
28,001 to 50,000	35%
50,001 and above	43%

⦁ The fringe benefits tax exemption, introduced in 2024, has been extended to 2025. Under this provision, the benefits in kind/ fringe benefits given by the employer are not considered taxable i.e., exempted up to EUR 2,000 for employees/ workers with dependent children, EUR 5,000 for new employees away from home (>100 km) and up to EUR 1,000 for all other employees). The limit also includes amounts disbursed or reimbursed by the employer (i.e., payment of household utilities, rent and interest on the mortgage related to the primary home for all employees with or without children).

⦁ The Budget has introduced a new non-taxable allowance/ deduction/ exemption for employees earning up to EUR 40,000 annually. The allowance/ deduction/ exemption reduces the taxable income, resulting in less tax for the employees. The amount of the allowance/ deduction/ exemption is based on income brackets and decreases as income rises. Employees earning more than EUR 40,000 are not eligible for it. The income brackets and percentages of allowance are as below:

Income Range (In EUR)	Non-taxable allowance
Up to 8,500	7.1% of income is not subject to tax
From 8,501 to 15,000	5.3% of income is not subject to tax
From 15,001 to 20,000	4.8% of income is not subject to tax
From 20,001 to 32,000	Fixed allowance of EUR 1,000
From 32,001 to 40,000	Fixed allowance of EUR 1,000 decreases gradually as income increases

The employers will automatically apply the permissible deductions to their employees’ salaries when same are paid.

⦁ Corporate tax measure:

Italy has introduced a new incentive providing reduced corporate tax rate of 20%, referred to as Mini-IRES (“Mini Imposta sul Reddito delle Società, or Mini Corporate Income Tax”), only for the year 2025. This incentive is designed to encourage businesses to reinvest at least 80% of their profits, with at least 30% allocated to investments in advanced technologies and sustainable development.

Under this initiative, businesses will benefit from a reduced corporate tax rate of 20% instead of standard rate of 24%, leading to significant tax savings. This aims to foster long-term economic growth by promoting investments in innovation and sustainability. To qualify for Mini-IRES, companies must meet the following conditions:

Allocate at least 80% of their earnings in the year 2024 into a special equity reserve for a minimum of two years.
Invest in qualifying assets (such as investments in advanced technologies, renewable energy, or energy-efficient systems), with the required investment being, whichever is greater of:
- 30% of the retained earnings from 2024, or
- 24% of the total earnings from 2023.
The investment amount cannot be lower than EUR 20,000 in total.
Companies must complete the investment in qualifying assets by October 2026 for companies following the calendar year.

⦁ Indirect Tax measures:

DST changes: The budget 2025 introduced significant changes to Italy’s Digital Services Tax (“DST”) by removing the Italian revenue threshold. Under the current provisions, the DST of 3% is applied to resident and non-resident service providers meeting the two conditions at the company or group level viz., total global revenue of at least EUR 750 million and total revenue from digital services supplied in Italy of at least EUR 5.5 million. The new law removes the Italian revenue threshold, meaning any business with worldwide revenues exceeding EUR 750 million is now subject to the DST on digital services provided in Italy, regardless of the revenue generated within the country.
Additionally, the Budget introduced new payment requirements for the DST. Taxpayers are now required to remit a deposit equal to 30% of the DST due for the preceding calendar year by November 30, with the remaining balance due by May 16 of the following year. This deposit is an advance payment and will be deducted from the total DST liability once the final calculation is made. The remaining amount due must be paid by the specified date (May 16 of the following year).
Small business VAT exemption: On November 30, 2024, Italy published Legislative Decree no. 180/2024 in the Official Gazette no. 281 to implement two EU directives, namely Council Directive (“EU”) 2022/542 and Council Directive (“EU”) 2020/285. The amendments introduce a special VAT regime for small enterprises effective from January 1, 2025.
Accordingly, it is provided that a taxable person from another EU Member State can apply for a small business VAT exemption from registration in Italy, if its annual turnover in Italy is up to the amended VAT thresholds requirement and the total EU turnover does not exceed EUR 100,000.
New rules for determining the place of supply of services for remote events: The new rules will now apply for determining the place of supply of services for remote events i.e., where the presence of the recipient of such services is virtual i.e., online streaming and not physical, particularly in cultural, artistic, sports, scientific, educational, or entertainment events. In such cases, the VAT will be applied based on the recipient/ consumer’s location rather than the location of the event. For instance, VAT on online concerts attended by consumers or taxable persons will be collected in the country of the consumer’s residence or the taxpayer’s registered office.
Currently, the place of supply for services is generally the supplier’s registered office for B2C transactions (“Business-to-Consumer”). For B2B transactions (“Business-to-Business”), the place of supply is the recipient’s registered office or fixed establishment. The upcoming change will primarily impact B2C services, shifting the place of supply to the consumer’s location.

Implication:
Businesses and employers should take note of the budgetary changes and need to update their policies to follow new tax rules.

Japan

Japan: Freelancer Protection Act takes effect to ensure fair treatment and timely payments to freelancers.

Japan’s Freelancer Protection Act, officially known as the “Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators”, came into effect on November 1, 2024. This legislation aims to safeguard freelancers by establishing clear guidelines and obligations for businesses that engage their services. The key highlights include:

Definition of freelancers:The Act defines freelancers as individuals or corporations with only a single director and no employees, that engage in outsourced activities.
Written contracts:Businesses are required to enter into written or electronic contracts with freelancers to ensure transparency and mutual understanding of the terms of engagement, containing the following:
- The scope of services to be provided;
- Compensation amount; and
- Payment due date.
Timely payments:Payments to freelancers must be made within 60 days from the date of receiving the deliverables. In cases where the work is subcontracted, payment must be made within 30 days from the original contract’s payment due date.
Prohibition of unfair practices: The Act prohibits businesses from:
- Refusing to accept deliverables without fault attributable to the freelancer;
- Reducing agreed-upon compensation without justification;
- Setting compensation significantly lower than market rates without valid reasons; and
- Forcing freelancers to purchase goods or use services designated by the contracting party without a valid reason.
Prevention of harassment:Businesses must implement measures to prevent harassment of freelancers, including sexual harassment, maternity harassment, and power harassment. This includes establishing consultation systems and prohibiting unfavorable treatment of freelancers who seek assistance regarding harassment issues.
Termination notice: For ongoing service contracts, businesses are required to provide at least 30 days’ notice before terminating or deciding not to renew a contract with a freelancer. Additionally, upon request, businesses must disclose the reasons for contract termination without delay.
Penalties for non-compliance: Violations of the Act can result in administrative warnings, recommendations for remedial measures, and fines of up to JPY 500,000. Authorities may also publicize the names of non-compliant businesses, leading to reputational damage.

Implication:
Businesses engaging freelancers in Japan must ensure compliance with the Freelancer Protection Act by formalizing contracts, ensuring timely payments, preventing unfair practices, and addressing harassment risks to avoid penalties and reputational harm.

Japan: Japanese government unveils tax reforms proposals for 2025.

In December 2024, government of Japan unveiled its fiscal 2025 tax reform package, proposing several key tax measures aimed at stimulating economic growth and addressing demographic challenges. The proposed tax measures are yet to be debated in the National Diet (Japanese legislature) and may undergo changes. They are proposed to be effective from the year 2025.

The following are some of the key measures proposed.

Individual taxation:

The basic deduction for individual income tax (national taxes) will be raised to JPY 580,000 (from the current JPY 480,000), and the minimum employment income deduction will increase to JPY 650,000 (from the current JPY 550,000). Additionally, the annual income threshold for taxation will be raised to JPY 1.23 million (from the current JPY 1.03 million). The maximum deduction for college going children under dependent deduction will increase from JPY 1.03 million to JPY 1.5 million and reduction in deduction for school going children will be deferred.

Corporate taxation:

Special Defense Corporate Tax (“SDCT”):
- A new special defense corporate tax of 4% is proposed to be imposed on the standard corporate tax amount (i.e., taxable base) for all corporations subject to corporate income taxes. For calculating the tax base, certain credits would not be allowed to be deducted, but a basic deduction of JPY 5 million will be allowed. This taxation will apply to fiscal years beginning on or after April 1, 2026.
- Due date of filing tax return and payment: The due date for filing the SDCT tax return and making tax payment is the same as the due date of the corporate tax return.
Tax measures for SMEs:
Extended corporate tax reduction measures for SMEs: The special tax measure for small and medium-sized enterprises (“SMEs”) will be revised and extended by two years. For fiscal years where annual taxable income exceeds JPY 1 billion, the current 15% tax rate for income up to JPY 8 million will rise to 17%. However, tax rate of 15% will be maintained where taxable income is up to JPY 1 billion. Further, group companies under the group relief system will be excluded from the scope of tax reduction measures.
Certain tax incentives for SMEs will be extended for two more years such as SME investment incentive, SME business enhancement incentives and special measures to reduce taxable base for fixed assets tax.

International taxation:

Global Minimum Tax (“GMT”): Legislation on the Undertaxed Profits Rule (“UTPR”) and Qualified Domestic Minimum Top-up Tax (“QDMTT”) will be enacted. In order to allow affected companies sufficient time to adjust, the legislation will be applicable to fiscal years starting on or after April 1, 2026. The due date for tax return filing and payment is proposed to be 15 months (18 months in certain cases) from the end of relevant fiscal year. No filing is required if the tax amount is nil.

Implication:
Corporations should keep track of development as to the above proposals. There can be increase in tax burden due to special defense corporation tax. SMEs should evaluate the impact of changes and extension of incentives. Employers may have to adjust payroll practices in view of proposals to change in basic deduction and employment related deductions.

Lithuania

Lithuania: Thresholds for Intrastat returns increased from January 1, 2025.

In Lithuania, statistical reports called ‘Intrastat returns’ are required to be submitted in respect of the movement of goods across the national borders to or from other EU countries. Intrastat returns list the goods sent out of Lithuania i.e., ‘dispatches,’ and goods brought into Lithuania i.e., ‘arrivals.’

Intrastat returns are required to be submitted only upon exceeding the reporting thresholds.

The threshold for submitting Intrastat returns revised with effect from January 1, 2025, are as follows:

Arrivals threshold: EUR 570,000 (previously EUR 550,000)
Dispatches threshold: EUR 400,000 (unchanged)

Implication:
The businesses will need to follow revised thresholds for submission of Intrastat returns.

Malaysia

Malaysia: Increased social security organization (“SOCSO”) salary ceiling effective October 1, 2024.

Effective October 1, 2024, the wage ceiling for contributions to the Social Security Organization (“SOCSO”) has been increased to RM 6,000 (previously RM 5,000). The Employment Insurance System (Amendment) Act 2024 and the Employees’ Social Security (Amendment) Act 2024 effected this amendment.

Implication:
Employers need to take note of increased salary ceiling and adjust their payroll practices.

Malaysia: Companies (Amendment) Act 2024 effective from November 30, 2024.

The Companies (Amendment) Act 2024 (“Amendment Act”), which modifies certain provisions of the Companies Act 2016 (“Principal Act”), took effect on April 1, 2024, except for sections 4, 14, 26, and 28. The Minister of Domestic Trade and Cost of Living has specified November 30, 2024, as the effective date for sections 4, 26, and 28 of the Amendment Act. These provisions are as follows:

Inclusion of beneficial owner information in annual return: Section 4 and 26 of the Amendment Act require companies, including foreign companies, to include in the Annual return, the details of BO and the address at which the BO register is kept if it is not kept at the registered office.
Disclosure of BO information (section 28): Any information previously required to be advertised in a newspaper must now be published or advertised on the Companies Commission of Malaysia (“CCM”) website, using the form and in a manner specified by the Registrar and subject to the payment of a prescribed fee.

Implication:
Starting from November 30, 2024, Companies are required to comply with the beneficial ownership related compliances and need to include the related information while preparing the annual return.

Malaysia: Minimum Wages Order 2024 published in the official gazette.

Malaysia has revised minimum wages as per the Minimum Wages Order 2024 [P.UT.(A) 376/2024] which was officially gazetted on December 4, 2024. The increase in minimum wages will be effective as under:

Effective February 1, 2025, a minimum monthly wage of RM 1,700 will apply to employers with five or more employees and employers classified under the Malaysia Standard Classification of Occupations 2020 (“MASCO”) as conducting professional activities, regardless of their workforce size.

However, starting August 1, 2025, the RM 1,700 minimum monthly wage will extend to all employers across the board, irrespective of the number of employees.

Malaysia: Malaysia announces effective dates for amendments to Personal Data Protection Act

Malaysian Parliament passed several amendments to the Personal Data Protection Act (“PDPA”) in July 2024 which received royal assent and were published in Official Gazette in October 2024. The details of key amendments to PDPA can be read in our October 2024 Global Updates. On December 24, 2024, the Digital Minister of Malaysia has published the effective date of various amendments as under:

Provisions effective from April 1, 2025:
- Requirement for data processor to comply with the security principle.
- Amendments relating to cross-border transfer of personal data.
- Amendments relating to data controller definition and sensitive personal data definition.
- Penalty related amendments.
Provisions effective from June 1, 2025:
- New requirement for data controller and processor to appoint a data protection officer.
- Requirement of data breach notification.
- Amendment providing for data portability rights of data subjects.

Further, certain ancillary provisions of the amendment Act have come into effect on January 1, 2025.

Implication:
Companies subject to data privacy law should take note of effective dates for various obligation and be compliant with new requirements.

Mexico

Mexico: Daily minimum wages increased to MXN 278.80 from MXN 248.93 effective from January 1, 2025.

On December 4, 2024, the Minimum Wage National Commission (“CONASAMI”) increased the daily minimum wages to MXN 278.80 from MXN 248.93 effective from January 1, 2025.

Minimum wages are used to calculate social security contributions of the employees.

Mexico: New UMA values effective from February 1, 2025.

The Mexican Government published unidad de medida y actualización or Unit of Measurement and Update (“UMA”) which are effective from February 1, 2025.

UMA values are as under:

Period	From February 1, 2025 (Amounts in MXN)	From February 1, 2024 (Amounts in MXN)
Daily	113.14	108.57
Monthly	3,439.46	3,300.53
Annually	41,273.52	39,606.36

The UMA values are used for computing tax and social security contributions for employees.

Implication:
Employers must make note of these increased UMA values for the purpose of calculating payroll and social security contributions for the year 2025.

Morocco

Morocco: Highlights of Morocco Finance Law 2025

The Finance Law 2025 (Law No. 60-24) was published in the official bulletin on December 19, 2024, post adoption of the same by both the houses of parliament. The key measures of Finance Law 2025 are highlighted below which are effective from January 1, 2025:

Tax rates for Individuals:

The Finance Law for 2025 has revised tax brackets and rates as under:

Income Bracket 2025 (Amounts in MAD)	Tax Rates 2025	Income Bracket 2024 (Amounts in MAD)	Tax Rates 2024
Up to 40,000	0%	Up to 30,000	0%
40,001 to 60,000	10%	30,001 to 50,000	10%
60,001 to 80,000	20%	50,001 to 60,000	20%
80,001 to 100,000	30%	60,001 to 80,000	30%
100,001 to 180,000	34%	80,001 to 180,000	34%
Above 180,000	37%	Above 180,000	38%

Value Added Tax (“VAT”):

The Finance Law 2025 clarifies how to determine the residence of customers in Morocco for taxing electronic services provided by non-residents. This includes factors such as using a Moroccan address for invoicing, making payments with a bank card from a Moroccan institution, accessing services through a Moroccan IP address, or utilizing Morocco’s international telephone code.
Non-resident electronic service providers will now be required to file their return quarterly instead of monthly requirement earlier.

Implication:
Employers need to consider personal tax changes while processing payroll. Businesses should take note of VAT changes in order to stay compliant.

Netherlands

Netherlands: Social security contribution rates and salary base announced for 2025.

The Ministry of Social Affairs and Employment, vide Regulation No. 2024-000091461 dated November 19, 2024, has set the social security contribution rates for the year 2025 as follows:

The total social security contribution for employees will continue to be 27.65% which includes general old-age social security (“AOW”) at 17.90%, surviving dependent (spouse) social security “ANW”) at 0.10%, and long-term care (“WLZ”) at 9.65%.
The social security contribution rates for employer are set at:
- General unemployment insurance (“AWF”) – 2.74% (previously 2.64%) for workers with an indefinite term; 7.74% (previously 7.64%) for flexible and temporary workers (no change);
- Occupational disability insurance (“WIA”) – High contribution rate will be 7.64% (previously 7.54%) and low contribution rate is set at 6.28% (previously 6.18%);
- Childcare allowance contribution – 0.50% (no change).
Health insurance premiums under the Health Insurance Act are set at 6.51% (previously 6.57%) for the year 2024.
The maximum salary base for the employer contribution for 2025 is EUR 75,864 (previously EUR 71,628) per annum.

Implication:
Employers should take note of changes in social security contribution rates / base and adjust their payroll processing accordingly.

Netherlands: Tax Plan 2025 approved by the Dutch Parliament.

The Senate (upper house of parliament) approved the 2025 tax plan on December 17, 2024. Most of the provisions are effective from January 1, 2025. The following are the major amendments introduced in the tax plan:

Personal Income Tax

Changes to Box 1 (Income from work and home ownership) (for individuals below state pension age):

Taxable Income Slabs (2025) (Amounts in EUR)	Tax rate (2025)	Taxable Income Slabs (2024) (Amounts in EUR)	Tax rate (2024)
Upto 38,441	35.82% *	Upto 38,098*	36.97%*
38,442 to 76,817	37.48%	38,099 to 75,518	36.97%
Above 76,817	49.50%	Above 75,518	49.50%

*Includes national insurance contribution 27.65%.

Changes to general and labour tax credit:

Tax Credit threshold (maximum tax credit)	Amounts (in EUR)
Tax Credit threshold (maximum tax credit)	2025	2024
General tax credit up to AOW retirement age	3,068	3,362
Employment tax credit up to AOW retirement age	5,599	5,532

Payroll tax:

Changes to 30% ruling which is applicable to foreign workers:
The 2024 Tax Plan had a proposal to reduce 30% tax rate in phased manner (30-20-10 ruling). But as per 2025 Tax Plan, a constant rate of 27% will be implemented from the year 2027. For 2025 and 2026, the maximum rate will remain at 30%. Employees who have already applied the 30% ruling before 2024 will continue to benefit from the 30% rate until the end of their ruling period.

The salary requirement for the 30% ruling will be increased to EUR 46,660 (previously EUR 46,107) as of January 1, 2027. For employees under 30 years of age with a master’s degree, the salary requirement will be EUR 35,468 (previously EUR 35,048). Employees who already applied the 30% ruling before 2024 will continue to follow the old (indexed) salary requirement until the end of the ruling’s duration.

Changes to work-related expense scheme or “WKR” (“Werkkostenregeling”):
As per the WKR scheme, the employer may provide the staff with tax-free allowances or benefits in kind for up to 2% (previously 1.92%) of the total taxable payroll amount up to EUR 400,000 and 1.18% of total taxable payroll amount above EUR 400,000.

Other tax measures:
The payroll tax reduction for employees involved in qualifying research and development (“R&D”) activities (“WBSO”) has been amended. The reduction rate for the first wage bracket has been increased from 32% to 36%, and the bracket threshold has been raised from EUR 350,000 to EUR 380,000.

Key corporate tax rates remain unchanged. Certain amendments introduced to bring global minimum tax provisions in line with the OECD administrative guidance on global minimum tax.

Implication:
Employers should take note of the changes in payroll taxes and adjust their payroll and withholding accordingly. Employers shall also take a note of changes to 30% ruling in order to adjust their payroll practices and changes to work related costs scheme.

Peru

Peru: Peru increases its Tax Unit Value (“UIT”) to PEN 5,350 from PEN 5,150 for 2025

Peruvian Ministry of Economy and Finance through Supreme Decree No. 260-2024-EF dated December 17, 2024, has published tax unit value (“Unidad Impositiva Tributaria – UIT”) for the year 2025 (i.e., From January 1, 2025, to December 31, 2025) with an increase to PEN 5,350 from PEN 5,150.

The tax unit value is used for various tax related purposes, viz. calculating individual income tax deductions, for determining revenue thresholds for transfer pricing local and master files, etc.

Implication:
Companies need to consider latest tax unit value for computation of tax liability of employees and for determining revenue thresholds for transfer pricing local and master files.

Peru: Increases minimum living wage to PEN 1,130 from PEN 1,025 for workers under the private labour regime, with effect from January 1, 2025.

On December 28, 2024, Supreme Decree No. 006-2024-TR was published, raising the Minimum Vital Remuneration (“RMV”) for workers under the private labour regime by PEN 105. This increase, to PEN 1,130 from PEN 1,025, will take effect from January 1, 2025.

Poland

Poland: Polish President signed the law on November 15, 2024, to implement Global Minimum Tax effective from January 1, 2025.

Polish President signed the “Act on Equalization of Constituent Units of International and Domestic Groups” on November 15, 2024, transposing the EU Minimum Tax Directive (Council Directive (“EU”) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union) into law, which was published in Polish Journal of Laws on November 19, 2024. The provisions introduce a 15% minimum effective tax rate for companies that are part of multinational and domestic groups with consolidated revenue of at least EUR 750 million in at least two of the previous four years. The new regulations are effective from January 1, 2025. However, entities have the option to voluntarily apply these rules to taxable years beginning after December 31, 2023.

The provisions include:

Qualified Domestic Minimum Top-up Tax (“QDMTT”) – This domestic top up tax of 15% applies to qualifying companies and permanent establishments (i.e., constituent/ member companies of the group) in Poland with an effective tax rate below 15%.
Income Inclusion Rule (“IIR”) – This is payable by the Poland parent companies (i.e., Ultimate parent entity of the group) with respect to their foreign low-tax constituent/ member companies. The IIR applies to financial years commencing on or after December 31, 2023.
Undertaxed Profits Rule (“UTPR”) – The UTPR generally applies where the jurisdiction/ country of the ultimate parent company of the group has not introduced the provisions of global minimum tax. In such cases, the constituent/ member company in Poland pays the UTPR in respect of foreign low-tax constituent/ member companies i.e., for which the ultimate parent company has not applied equivalent minimum top up tax in its own country in the absence of the regulations. The UTPR will apply to financial years commencing on or after December 31, 2024.
The transitional simplification regimes also apply in the first three years of validity of the rules (tax periods beginning on or before December 31, 2026, to June 30, 2028), and the taxpayers can elect to apply the OECD’s temporary safe harbor based on country-by-country (“CbC”) reporting.

The filing/ compliance obligations include the following –

Top up tax information return – It is based on OECD’s Global Information Return (“GIR”). It’s required to be filed by every constituent/ member company or one designated constituent/ member company in Poland within 15 months (within 18 months only in the first year) from the end of the financial year.
Annual top-up tax payment and return – This is actual return of top-up tax such as QDMTT, IIR or UTPR, which is required to be filed in Poland within 18 months (within 21 months only in the first year) from the end of the financial year.

Implication:
The companies meeting the prescribed thresholds need to take note of these changes.

Poland: Poland announced revised thresholds for small taxpayers and social security contribution caps, effective from January 1, 2025.

In Poland, the threshold of PLN equivalent of EUR 2 million applies to small taxpayers for the reduced corporate tax rate, the simplified VAT regime, and the simplified flat-rate tax. The threshold for the investment incentive deduction is PLN equivalent of EUR 50,000. PLN equivalent values are determined by an exchange rate specified by Poland’s National Bank on the first working day of October in the previous year, rounded off to the nearest thousand. Accordingly, thresholds in PLN equivalent set for 2025 are as follows:

Description	2025 and 2024 (EUR)	2025 (PLN)	2024 (PLN)
Revenue threshold for small taxpayers for reduced corporate tax rate (inclusive of VAT)	2 million	8,569 million	9,218 million
Revenue threshold for simplified flat-rate tax applicable to small taxpayers	2 million	8,569 million	9,218 million
Supply threshold applicable to small taxpayers for simplified VAT regime	2 million	8,569 million	9,218 million
Investment incentive deduction for acquisition of fixed assets for small taxpayers and newly established businesses	50,000	214,000	230,000

Additionally, the social security contribution caps are increased from PLN 234,720 (2024) to PLN 260,190 for 2025 calculated at 30 times the estimated average salary of PLN 8,673. This cap applies to contributions to pension (retirement) and disability funds by both employers and employees.

Implications:
Small taxpayers should take note of the revised thresholds to reassess their eligibility for tax incentives and compliance with VAT regulations, impacting their overall tax planning.

The employer needs to consider these revised social security contributions caps for processing the payroll.

Poland: Increased monthly minimum wages from PLN 4,300 to PLN 4,666 gross effective from January 1, 2025.

The Social Insurance Institution (“ZUS”) of Poland has increased minimum monthly wages from PLN 4,300 gross (PLN 28.10 per hour) to PLN 4,666 gross (PLN 30.50 per hour) effective from January 1, 2025.

The minimum wage is the reference point for calculating minimum social security contributions, including health insurance, labour fund, accident, disability, and pension contributions.

Poland: Poland passes legislation to make December 24 (Christmas Eve) a public holiday effective from February 1, 2025.

On December 24, 2024, the President of Poland signed the “Act of December 6, 2024, amending non-working days and certain other laws” to declare December 24 i.e., Christmas Eve as a public holiday, effective from February 1, 2025.

Additionally, changes were also introduced to the Act of January 10, 2018, which regulates the restriction of trade on Sundays and public holidays. Effective from January 1, 2025, the number of trading Sundays in December will increase to three, allowing shops to open on the three Sundays before Christmas.

Prior to the changes effective in 2025, Poland permitted trade on seven Sundays each year. These included the last Sundays of January, April, June, and August, as well as the two Sundays preceding Christmas.

Implication:
Employers in Poland need to revise their holiday policy/ schedule to include December 24 as a public holiday.

Serbia

Serbia: Key personal and corporate tax reforms effective January 1, 2025

The amendments to the Personal Income Tax Law, the Law on Mandatory Social Security Contributions, and the Corporate Income Tax Law were published in the Official Gazette of Serbia No. 94 on November 28, 2024. These amendments have come into effect on January 1, 2025.

The key amendments to personal income tax and social security contribution law:

To claim a tax credit for investments in alternative investment funds, individuals must hold the investment units for at least three years following the calendar year in which annual income tax is determined. Disposal of these investment units within the year of acquisition or the subsequent three years results in the loss of the tax credit for the annual personal income tax.
The non-taxable monthly amount for salary tax calculation will increase to RSD 28,423 (previously RSD 25,000). This amount will be adjusted again in January 2026.
The non-taxable daily per diem for international business travel will rise to EUR 90 (previously EUR 50).
The deadline for claiming refunds on part of the salary tax and mandatory social insurance contributions for newly employed individuals has been extended. This relief applies to salaries paid up to December 31, 2025.

Key amendments to Corporate Income Tax (“CIT”) law

Tax return in case of liquidation or bankruptcy: The responsibility for filing tax returns in case of liquidation/bankruptcy is on liquidation or bankruptcy administrator and the return is to be filed during as well on conclusion of the relevant proceedings. The deadlines are also prescribed for filing the relevant returns.
Filing of tax return and tax payment in case of deletion of foreign company branches: Tax returns and balance taxes for deleted branches must be filed within 60 days of registration in the appropriate register and it should be prepared for period up to the day preceding the registration date.

Implication:
Employers will benefit from extended tax relief for hiring new employees until December 2025, while adjustments to non-taxable salary amounts and travel allowances may influence payroll and expense policies. Companies planning liquidation or closing of the branch should note requirements relating to filing of tax return.

Serbia: Law amending VAT law and e-invoicing law published in official gazette.

The Law amending the Value Added Tax (“VAT”), and E-invoicing Law was adopted on November 27, 2024, and published in the Official Gazette No. 94/2024 on November 28, 2024. The law becomes effective December 15, 2024, with most provisions becoming applicable from January 1, 2025, except when stated otherwise.

Key amendments to VAT law:

VAT payer registration: The law now requires entities to register for VAT within 5 days of exceeding a turnover threshold of RSD 8,000,000.
Preliminary VAT return: New requirement of preliminary VAT return is Introduced which is a system-generated report using the System of Electronic Invoices (“SEF”). It does not apply to the first and last tax periods of a VAT payer. Overview of VAT calculation (“POPDV form”) submission has been abolished. Preliminary VAT return provisions apply from the January 2026 tax period.
Changes in tax base: Taxpayers have a new obligation of adjusting the tax base in case subsequent increase or decrease in sales. VAT payers must issue debit or credit notes depending on base adjustments. Further in case of credit note, the recipient needs to confirm making of consequent adjustment and no claim for input VAT being made. Certain other additional requirements are also specified. It is permissible to reduce tax base in case of cancelled invoices provided conditions such as recipient confirmation are met.
Input VAT deduction: The deduction is to be allowed only on the basis of accepted e-invoices. To claim input VAT deduction in a specific period, the timelines are provided withing which e-invoice should be accepted.
Tax period changes: VAT payers can switch from quarterly to monthly tax periods by applying between December 20 to December 31 of the current year. This provision is effective from December 20, 2024.
There are certain other amendments relating to obligation for creating internal invoices, import tax base, etc.

Key amendments to e-invoicing law

Entity status declaration: Businesses must declare their VAT status (whether VAT payer or not) in the Electronic Invoicing System (“SEF”) within five days of registration. This requirement is effective from December 15, 2024.
Electronic VAT recording: The deadline for electronically recording VAT, including increases and decreases in tax bases, is extended to the 12th day of the month following the relevant tax period. This applies to tax periods starting after December 31, 2024.
Cross-Border transactions: SEF users can access import data by viewing customs declarations, effective January 1, 2025.
Penalties: Fines ranging from RSD 200,000 to RSD 2 million can be imposed for non-compliance with obligations such as status declaration and electronic VAT recording.

Implication:
Businesses should study the impact of amendments and make necessary changes to their VAT related processes.

Serbia: Digitalization of sick leave certifications to be effective from March 2025

Starting March 2025, Serbia will roll out an innovative electronic sick leave system designed to streamline the process of managing temporary work incapacity of employees which will help employee, employers, and medical institutions. This initiative will eliminate the need for employees to personally deliver sick leave certificates, as confirmations will be automatically sent to employers through a digital platform.

Healthcare professionals will input necessary details into the system, which will notify employers about the start and expected duration of sick leave while ensuring employee privacy by excluding medical records. A pilot phase is set to begin in early 2025, with full implementation expected by March.

Implication:
Employers should monitor this new initiative and plan for alignment of their systems and HR processes.

Singapore

Singapore: Singapore implements Global Minimum Tax effective from financial year January 1, 2025.

On October 15, 2024, Singapore Parliament passed “The Multinational Enterprise (Minimum Tax) Bill” (“MMT Bill”) which received assent on November 8, 2024. This legislation introduces the imposition of Pillar 2 top-up taxes in Singapore, which includes the Singapore Domestic Minimum Tax (“DMT”), and Singapore Income Inclusion Rule (“IIR”) tax. The provisions introduce a 15% minimum effective tax rate for companies that are part of multinational and domestic groups with consolidated revenue of at least EUR 750 million in at least two of the previous four years, effective from the financial years starting on or after January 1, 2025.

The provisions include:

Domestic Top-up Tax (“DTT”) – This domestic top up tax of 15% applies to qualifying companies and permanent establishments (i.e., constituent/ member companies of the group) in Singapore with an effective tax rate below 15%.
Multinational Enterprise Top-Up Tax (“MTT”) – This is payable by the Singapore parent companies (i.e., Ultimate parent entity of the group) with respect to their foreign low-tax constituent/ member companies. This is referred to as “IIR” in the OECD GloBE rules.
Further, a de minimis exclusion is provided in respect of multinational or national group companies located in a jurisdiction when their aggregate revenues and incomes are less than EUR 10 million and EUR 1 million, respectively, on average over a three-year period. Under the exception, the top up tax is presumed to be zero.
The transitional simplification regimes also apply in the first three years of validity of the rules (tax periods beginning on or before December 31, 2026, to June 30, 2028), and the taxpayers can elect to apply the OECD’s temporary safe harbor based on country-by-country (“CbC”) reporting.
Singapore currently has not implemented Undertaxed Payment Rule (“UTPR”).

The filing/ compliance obligations include the following:

Top up tax information return: It is based on OECD’s Global Information Return (“GIR”). It’s required to be filed by every constituent/ member company or one designated constituent/ member company in Singapore within 15 months (within 18 months only in the first year) from the end of the financial year.
Annual top-up tax payment and return: This is actual return of top-up tax such as MTT and DTT, which is required to be filed in Singapore within 30 days after 15 months from the end of the financial year.

Implication:
The companies meeting the prescribed thresholds need to take note of these changes.

Singapore: Singapore amends its paternity and shared parental leave provisions.

On November 13, 2024, Singapore Parliament passed the Child Development Co-Savings (Amendment) Bill amending government paid paternity leave provisions and introduced new shared parental leave scheme, effective from April 1, 2025.

The key changes include the following:

Eligible fathers will receive a mandatory four weeks of government paid paternity leave (“GPPL”) i.e., increase from the current two weeks of GPPL.
The new shared parental leave scheme will replace the current scheme. Under the new provisions, parents of children born on or after April 1, 2025, will be able to share their leave between them up to 10 weeks of paid leave in two phases, viz. up to six weeks from April 1, 2025, and up to 10 weeks from April 1, 2026. Currently, eligible fathers are entitled to share up to four weeks of their spouse’s government paid maternity leave.
The employment protection against dismissal etc. extends to fathers and adoptive parents availing GPPL and adoption leaves, which currently applies to only female employees on maternity leave.
The employees need to inform the employer at least 4 weeks in advance if they intend to avail their parental leaves.

Implication:
Employers need to assess and modify their leave policy, employment contracts as per the new provisions.

South Africa

South Africa: SARS updates interest rate tables: reductions across all categories.

The South African Revenue Services (“SARS”) has published revised interest rate tables as under:

Table	Description	New Rate	Previous Rate	Effective Date
Table 1	Interest rates chargeable on outstanding taxes, duties, and levies, and interest payable on refunds following appeals or certain delayed refunds.	11.50%	11.75%	January 1, 2025
Table 2	Interest rates on credit amounts (overpayment of provisional tax).	7.50%	7.75%	January 1, 2025
Table 3	Income tax rates for interest-free or low-interest loans.	8.75%	9.00%	December 1, 2024

Implication:
Businesses should take note of the reduction in the interest rates.

South Africa: Employment Equity Amendment Act to be effective January 1, 2025.

The President of South Africa has issued a proclamation declaring that amendments to the Employment Equity Act, 1998 (“EEA”), signed into law in 2023, are effective from January 1, 2025. These amendments aim to promote workplace equity while alleviating the regulatory burden on smaller employers.

The following are the key changes:

Amended definition of ‘designated employer’: Effective January 1, 2025, the definition of a “designated employer” will not have the sectorial turnover threshold. Employers will qualify as “designated employers” only if they have more than 50 employees, regardless of their turnover. Employers with fewer than 50 employees will no longer be required to comply with the EEA’s requirements, such as maintaining an employment equity plan or submitting annual reports. This change is designed to ease the compliance burden for small businesses.
Sectoral numerical targets: The Minister of Employment and Labour is now authorized to set sector-specific numerical targets via regulations to ensure equitable representation of designated groups (e.g., African, Coloured, Indian people, women, and people with disabilities) across all occupational levels. Although draft regulations have been published, the final sectoral targets have yet to be confirmed. Further, the amended provisions require “designated employers” to align the numerical targets in their employment equity plans with the sectoral targets set by the government. In order to qualify for state contracts for work, the designated employer is required to meet the sectoral targets and there should not unresolved complaints of unfair discrimination.
Provisions relating to ‘people with disabilities’: The definition now includes individuals with long-term or recurring physical, mental, intellectual, or sensory impairments that significantly limit employment opportunities due to various barriers. The requirement for the Health Professionals Council of South Africa to certify psychological testing and similar assessments has been eliminated.
Expanded authority for labour inspectors: Labour inspectors now have the power to request written commitments from designated employers to consult employees, conduct analyses, publish reports, and assign responsibility to senior managers.
Regulations on compliance orders: The Minister can now regulate how compliance orders related to affirmative action aspects are served on designated employers.
Changes to employment equity reporting deadlines: The amendment removes the fixed date for annual submissions of employment equity reports. Instead, the Minister will establish submission requirements and deadlines. Income differentials statements, previously submitted to the Employment Conditions Commission, will now be sent to the National Minimum Wage Commission.
Streamlined consultation requirements: Where a representative trade union exists in a workplace, designated employers are required to consult only with the union rather than directly with employees.

Implication:
Employers who are subject to EEA provisions must align their human resource policies with the new requirements.

South Korea

South Korea: Government amends laws to promote childcare support to be effective from February 23, 2025

On October 22, 2024, the Korean government approved amendments to three laws related to childcare support, aimed at fostering a balance between work, family, and personal life. The revised provisions of the Equal Employment and Work-Family Balance Assistance Act, the Employment Insurance Act, and the Labor Standards Act will take effect on February 23, 2025.

The following are the key amendments:

The childcare leave period is extended to 18 months from 1 year if each of both parents takes at least 3 months of leave for the same child. This provision also applies to single parents or parents of children with severe disabilities. Additionally, childcare leave can now be taken in up to four separate periods instead of three.
The paternity leave period has been increased from 10 days to 20 days. Further in case of employees in small and medium-sized companies classified as preferential supported enterprises. the government paternity leave pay benefit will now increase from 5 days to 20 days. Additionally, employees now have up to 120 days from the date of childbirth to request paternity leave, an extension from the previous limit of 90 days. Paternity leave can also be taken in up to four separate periods instead of two.
The eligible child age for reduced working hours during childcare has been revised from 8 to 12 years of age. Unused childcare leave can now be converted into reduced working hours, with twice the unused period added, allowing up to 3 years of reduced hours for employees who do not take leave. Additionally, the minimum duration for childcare leave has been shortened from three months to one month.
Previously, reduced working hours were available only during the first 12 weeks and after the 36th week of pregnancy. However, this period has now been extended to include both the first 12 weeks and after the 32nd week of pregnancy. Further, the period of reduced working hours due to pregnancy and childcare will be considered as period attendance at work for the purpose of calculation of annual leave eligibility with effect from October 24, 2024.
The maternity leave for premature births is increased from 90 days to 100 days. The additional 10 days will be paid by the government.

Implication:
The companies need to revise their employment policies, human resource manual and amend employment contracts to comply with the new amendments.

South Korea: Minimum wage increased by 1.7% for the year 2025.

The South Korea’s Minimum Wage Commission (“MWC”) declared on July 11, 2024, its decision to raise the minimum wage for the year 2025 by 1.7% to KRW 10,030 per hour (previously KRW 9,860 per hour).

Spain

Spain: Spain implements Global Minimum Tax effective from December 22, 2024.

The Spanish Government published ‘Law No. 7/2024 – Global Minimum Tax Law’, dated December 20, 2024, implementing global minimum tax transposing the EU Minimum Tax Directive (Council Directive (“EU”) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union) into the law, effective from December 22, 2024. The provisions introduce 15% global minimum tax rate for companies, that are part of multinational and domestic groups with consolidated annual revenue of at least EUR 750 million in atleast two of the previous four financial years.

The provisions include:

National Complementary Tax/ Qualified Domestic Minimum Top-up Tax (“QDMTT”) – This domestic minimum top up tax of 15% will apply to qualifying companies and permanent establishments (i.e., constituent/ member companies of the group) in Spain, with an effective tax rate below 15%.
Primary Complementary Tax/ Income Inclusion Rule (“IIR”) – This is payable by the Spanish parent companies (i.e., Ultimate parent entity of the group) with respect to their foreign low-tax constituent/ member companies. The IIR applies to financial years commencing on or after December 31, 2023.
Secondary/ Additional Complementary Tax/ Undertaxed Profits Rule (“UTPR”) – The UTPR generally applies where the jurisdiction/ country of the ultimate parent company of the group has not introduced the provisions of global minimum tax. In such cases, the constituent/ member company in Spain pays the UTPR in respect of foreign low-tax constituent/ member companies i.e., for which the ultimate parent company has not applied equivalent minimum top up tax in its own country in the absence of the regulations. The UTPR will apply to financial years commencing on or after December 31, 2024.
Further, a de minimis exclusion is provided in respect of multinational or national group companies located in a jurisdiction when their average revenues and average incomes/losses are less than EUR 10 million and EUR 1 million, respectively, on average over a three-year period. Under the exception, the top up tax is presumed to be zero.
The transitional simplification regimes also apply in the first three years of validity of the rules (tax periods 2024, 2025 and 2026), and the taxpayers can elect to apply a OECD’s temporary safe harbor based on country-by-country (“CbC”) reporting.

The filing/ compliance obligations include the following:

Complementary tax information declaration – It’s required to be filed by every constituent/ member company or one designated constituent/ member company in Spain within 15 months (within 18 months only in the first year) from the end of the financial year. The filing obligation will not apply if the ultimate parent entity or its designated filing entity submits the information declaration in its own country which has a qualifying competent agreement to exchange the declaration with Spain. In such cases, Spanish constituent/ member entity must notify the tax authority about the identity of the entity that will be filing the declaration and the jurisdiction in which it will be filed.
Annual top-up tax payment and return – This is actual return of top-up tax such as QDMTT, IIR or UTPR, which is required to be filed in Spain within 25 calendar days following 15 months from the end of the financial year. The payment of top-up tax is made along with the filing of return.

Implication:
Businesses should take note of changes and comply with them accordingly.

Spain: The maximum monthly social security contribution base increased from EUR 4,720.50 to EUR 4,909.32 effective from January 1, 2025.

The Spanish government announced the increase in the maximum monthly social security contribution base from EUR 4,720.50 to EUR 4,909.32 effective from January 1, 2025. Further, an additional contribution of 0.8% (previously 0.7% in 2024) will be paid towards non-occupation common contingencies insurance (‘MEI’) where the employer will contribute to the extent of 0.67% (0.58% in 2024) and employee will contribute to the extent of 0.13% (0.12% in 2024).

The maximum monthly contribution base is used for calculation of various social security contributions relating to unemployment insurance, common contingencies insurance, vocational training, and wage guarantee fund contributions (“FOGASA”), wherein both the employer and employee contribute.

Implication:
The employers will need to take note of the increased social contribution base and the rate for calculating the social security contributions for 2025.

Spain: New additional solidarity contribution effective from January 1, 2025.

Spanish Government published Royal Decree No. 2/2023 of March 16, 2023, establishing a new framework for the sustainability of the public pension system by introducing the additional solidarity quota (“cuota adicional de solidaridad”). The decree amends certain provisions of General Social Security Law by introducing a new additional solidarity contribution payable by employers and employee effective from January 1, 2025.

Currently, the Spanish social security system consists of employer and employee contributions, calculated on the salaries of the employees, and capped by minimum and maximum contribution bases.

The additional contribution will apply only on the salaries/ remuneration exceeding the maximum contribution base (i.e., EUR 4,909.32 per month for 2025 year for the employees). It will be calculated at different specified percentages/ rates on the three contribution brackets set based on the salaries/ remuneration exceeding the maximum contribution base. The employer and employee will contribute 83.39% and 16.61% respectively. Further, the percentage/ rate levied on each bracket will increase progressively each year until 2045.

Excess remuneration in percentage	Excess remuneration in EUR (from maximum contribution base for 2025)	Additional contributions rates (combined) for 2025	Additional contributions rates (combined) for 2045
Up to 10% above the maximum base	From 4,909.32 up to 5,400.25	0.92%	5.5
From 10% to 50% above the maximum base	From 5,400.26 up to 7,363.98	1%	6
Above 50% of the maximum base	From 7,363.99 onwards	1.7%	7

Implication:
The companies need to take note of the changes and accordingly revise their contribution payments.

Spain: Corporate income tax rate gradually reduced for micro-enterprises and small companies effective from January 1, 2025.

The Spanish Government published ‘Law No. 7/2024 in the official gazette on December 21, 2024, and is effective from December 22, 2024, amending certain provisions of Law No. 27/2014 – corporate income tax and introducing a gradual reduction of corporate income tax rate for micro-enterprises and small companies.

Effective from January 1, 2025, corporate tax rate will be gradually reduced in respect of micro-enterprises (net turnover less than EUR 1 million) and small companies (net turnover less than EUR 10 million) as follows:

Taxable profit (Amounts in EUR)	Reduced Rate			Standard rate
Taxable profit (Amounts in EUR)	2027	2026	2025	2024
Micro-enterprises: Taxable profit from 0 – 50,000	17%	19%	21%	25%
Taxable profit above 50,000	20%	21%	22%	25%
Small companies:	22%	23%	24%	25%

Implication:
Small as well as micro companies can take benefit of the reduced corporate tax rate and thereby minimize their taxes.

Sweden

Sweden: Sweden revises the National Income Tax Threshold for 2025

The National income tax threshold for individuals was revised through Regulation No. SFS 2024:2019 which was published on November 19, 2024, in the Sweden official Gazette. However, the tax rate remains unchanged.

Financial Year 2025	Financial Year 2024	Tax Rate for Financial Year 2025 & 2024
Taxable Income Threshold (in SEK)	Taxable Income Threshold (in SEK)	Tax Rate for Financial Year 2025 & 2024
From 0 to 625,800	From 0 to 598,500	Nil
From 625,801 and above	From 598,501 and above	20%

Implication:
Employers need to consider changes made in the personal tax rates while calculating the payroll.

Sweden: Sweden increases VAT registration threshold effective from January 1, 2025

In the Budget for 2024, it was proposed to increase the annual turnover threshold to SEK 1,20,000 effective from January 1, 2025.

Accordingly, on October 29, 2024, the Swedish Official Gazette published Law No. SFS 2024:942 by making amendments to the Value Added Tax (“VAT”) Act effective from January 1, 2025.

The law increases the VAT registration threshold to SEK 120,000 from SEK 80,000 and thereby granting relief to the small businesses.

Further, with effect from January 1, 2025, amendments are also made implementing the EU small business scheme for cross-border supplies as per EU 2020/285 of February 18, 2020. Accordingly, it is provided that a taxable person from another EU Member State can apply for a small business VAT exemption from registration in Sweden, if its annual turnover in Sweden is up to the amended VAT thresholds requirement and the total EU turnover does not exceed EUR 100,000.

Implication:
Businesses should take note of changes and comply with them accordingly.

Switzerland

Switzerland: Switzerland increases the child and education allowance with effect from 2025.

The Swiss Federal Council amended the Federal Act on Family Allowances, increasing the minimum rates for the child and education allowances effective from January 1, 2025. This will assist the parents with expenses in raising and educating their children. The new minimum rates are as follows:

⦁ Child Allowance: CHF 215 (increased from CHF 200) per month; and
⦁ Education Allowance: CHF 268 (increased from CHF 250) per month.

Implication:
Employers should take a note of the change and update the payrolls accordingly.

Taiwan

Taiwan: Monthly minimum wages increased to TWD 28,590 from TWD 27,470 effective from January 1, 2025.

The Ministry of Labor increased the monthly minimum wages to TWD 28,590 per month from TWD 27,470 per month effective from January 1, 2025. Minimum wages are used to calculate social security contributions of the employee.

Thailand

Thailand: Introduction of Employee Welfare Fund contribution effective October 1, 2025.

Thailand Government enacted Royal Decree on Determination of the Period for Starting the Collection of Savings and Contributions to the Employee Welfare Fund which was published in Official Gazette on November 15, 2024. The Decree implements the requirement under the Labor Protection Act B.E. 2541 (1998) mandating the employer to contribute to the Employee Welfare Fund (“EWF”). The provisions requiring such contribution are effective from October 1, 2025. Further the contribution rates have been specified by the Ministerial Regulations on November 14, 2024. However, the requirement will not apply to employer who has established provident fund under the Provident Fund Act B.E. 2530 (1987).

Contribution Structure:

Effective October 1, 2025 – September 30, 2030: Both employers and employees are required to contribute 0.25% of wages to the EWF.
Effective October 1, 2030: The contribution rate will increase to 0.5% for both parties.

Contributions must be paid by the 15th of the month following the month to which the contribution relates. A delay in payment will incur a 5% monthly surcharge on the unpaid amounts.

Implication:
Employers who have not established a provident fund, would now be subject to the requirement of contribution to employee welfare fund effective October 1, 2025. Employers should upgrade their system for effective collection and payment of contribution to avoid penal consequences.

Thailand: Increased minimum wages to be effective from January 1, 2025.

Thailand has approved new minimum wage structure effective January 1, 2025, under which the minimum wages would vary by region. The revised minimum wage ranges from THB 337 to THB 400 per day as under:

THB 400 per day: High-cost areas such as Chachoengsao, Chonburi, Phuket, Rayong, and Koh Samui (Surat Thani).
THB 380 day: Muang District (Chiang Mai) and Hat Yai District (Songkhla).
THB 372 day: Bangkok and its surrounding provinces, including Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan, and Samut Sakhon.
THB 337 day: Southernmost provinces such as Narathiwat, Pattani, and Yala.

Thailand: Thailand enacted Emergency Decree on top-up tax for multinational enterprises, effective January 1, 2025.

On December 26, 2024, Thailand government enacted the Emergency Decree on Top-up Tax, B.E. 2567 (2024), which was published in the Royal Gazette. It imposed Pillar 2 top-up taxes for multinational enterprises (“MNEs”) with entities in Thailand, provided their effective tax rate (“ETR”) falls below 15%. It targets MNEs with consolidated revenues of at least EUR 750 million (or the equivalent in Thai Baht) in at least two of the previous four fiscal years. The decree takes effect for fiscal years starting on or after January 1, 2025.

The provisions include:

Domestic top-up tax [similar to OECD Qualified Domestic Minimum Top-up Tax (“QDMTT”)] – This domestic top up tax of 15% applies to qualifying companies and permanent establishments (i.e., constituent/ member companies of the group) in Thailand with an effective tax rate below 15%.
Income Inclusion Rules (“IIR”) – This is payable by the Thai parent companies (i.e., Ultimate parent entity of the group) or partially owned parent entity in Thailand with respect to their foreign low-tax constituent/ member companies in low tax jurisdictions.
Undertaxed Profits Rule (“UTPR”) – The UTPR generally applies where the jurisdiction/ country of the ultimate parent company of the group has not introduced the provisions of global minimum tax. In such cases, the constituent/ member company in Thailand pays the UTPR in respect of foreign low-tax constituent/ member companies i.e., for which the ultimate parent company has not applied equivalent minimum top up tax in its own country in the absence of the regulations.

All constituent/ member companies in Thailand must file the following returns/notifications within 15 months (within 18 months only in the first year) from the end of the financial year.

Notification of In-Scope MNE: Constituent/ member companies can designate one Thai entity to file this notification with the Revenue Department.
GloBE Information Return (“GIR”): Thai constituent/ member companies will not need to file a GIR if it has already been submitted by the UPE or a designated filing entity with a qualifying agreement in place.
Top-Up Tax Return: If applicable, constituent/ member companies must submit top-up tax returns and payments by the filing deadline.

Implication:
Thai entities belonging to MNE group meeting the specified criteria should take note of additional compliances and liability under the new law.

Turkey

Turkey: Gross minimum wage increased from TRY 20,002.50 to TRY 26,005.50 with effect from January 1, 2025.

Effective from January 1, 2025, the Turkish Ministry of Labor and Social Security has raised the monthly gross minimum wage to TRY 26,005.50 (previously TRY 20,002.50) leading to an increase in the net minimum wage to TRY 22,104.67 (previously TRY 17,002.12).

Turkey: Increases withholding tax rate on dividends effective from December 22, 2024.

Turkey’s Revenue Administration issued a Presidential Decision No. 9286, whereby the withholding tax rate on distribution of dividend to the following person is increased from 10% to 15%:

A natural person, either resident or non-resident;
A tax-exempt corporate entity; or
A non-resident company unless the dividends are earned through a permanent establishment or representative office in Turkey.

Additionally, the tax rate on branch remittance tax will also increase from 10% to 15%.

Implication:
The increase in withholding tax rates on dividend distributions and branch remittances will raise tax liabilities for companies operating in Turkey, potentially impacting their profit repatriation strategies.

United Kingdom

United Kingdom: UK Budget (Autumn Statement) 2024 – Highlights

On October 30, 2024, the Chancellor of the Exchequer, Rachel Reeves, presented the Autumn Statement before the UK Parliament. This is the Labour Government’s first budget in the last 14 years. The proposals put forth in the autumn statement aim to promote protection of working people, fixing the NHS (government run health service in UK), and rebuilding Britain. Subsequently, Autumn Finance Bill, 2024 and National Insurance Contributions (Secondary Class 1 Contributions) Bill was also presented before the Parliament which are under deliberation.

The following are the highlights of the proposals presented in the Autumn Statement and bills:

For individuals and employers:

National Insurance Contributions (“NICs”): The Autumn statement has proposed to increase the employer’s NI contribution rate from 13.8% to 15%. No change is proposed in employee’s NI contribution rates. The Autumn statement further proposes to reduce the secondary threshold i.e., per-employee threshold at which employers become liable to pay National Insurance contribution, from GBP 9,100 to GBP 5,000, effective from April 6, 2025.

The following table summarizes the changes in the contribution rates:

Timeline	Rates for Employer	Main rates for Employee (below Upper Earnings Limit)	Additional rate for Employee (above Upper Earnings Limit)
Prior to April 6, 2025	13.80%	8%	2%
Effective from April 6, 2025 (announced in Autumn statement 2024)	15%	8%	2%

With an aim to protect the smaller businesses, it is proposed to increase the employment allowance from GBP 5,000 to GBP 10,500. Employment allowance permits eligible employers to reduce their national insurance liability up to the above limit.
Effective from April 1, 2025, the NLW (National Living Wage) rates will increase by 6.7% from GBP 11.44 per hour to GBP 12.21 per hour and the NMW (National Minimum Wage) rate for those aged between 18 to 20 will increase by 16.3% to GBP 10 per hour. The government wants to create a single adult wage rate and therefore, working on reducing the gap between the main NLW rate and rate applicable to those aged between 18 to 20 years.
From April 2028, the personal income tax and NI thresholds will be updated in line with inflation and the government will discontinue with the freeze on these thresholds.
From April 2026, use of payroll software to report and pay tax on benefits in kinds (“BiK”) would become mandatory for both income tax and national insurance.
The main rates of Capital Gain Tax (“CGT”) will increase effective from October 30, 2024, as follows. These new rates will match the residential property rates, which are not changing.

Category of Tax	October 31, 2024, onwards	Pre-October 31, 2024
Lower rate of CGT	18%	10%
Higher rate of CGT	24%	20%

It is proposed to remove the remittance-based taxation applicable to non-domiciled individuals and replace it with a new internationally competitive residence-based regime from April 6, 2025. The new regime will provide 100% relief on foreign income and gains for those newly arrived in the UK for the first 4 years of residence provided they are not resident in UK in any of the earlier 10 consecutive years. After the first four years of residence, they will pay tax similar to other residents. The budget also includes proposals relating to transitionary arrangements. Further, significant changes are proposed with respect to inheritance tax.

For businesses and others

It is proposed to keep the headline corporate tax rate at 25% for the remaining period for this parliament. Further the small profit tax rate and the marginal tax rate and thresholds will also be maintained. It is proposed to continue with current system of R&D relief and capital allowance for remaining period of this parliament.
The Government will make recruitment agencies responsible for accounting for PAYE in case of payment made to workers who are employed through intermediary or umbrella companies. If there is no agency involved, the responsibility will be on the end client. This will take effect from April 2026. This measure is aimed at tackling tax avoidance and frauds by intermediaries in recruitment market.
Rate of interest levied by HMRC on unpaid tax liability will be raised by 1.5 basis points effective from April 2025.

Implication:
Employers should take note of increase in NI rates and reduction in secondary threshold and evaluate the impact on their profitability. Small business should take advantage of employment allowance increase. Businesses should monitor developments with respect to proposals to tackle non-compliance relating recruitment through intermediaries and evaluate their impact.

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