Mike Linter, Partner | 21 February 2024
Globally, 2024 is one of the biggest election years in history, in which citizens in more than 70 countries and territories around the world go to the ballots to cast their votes.
As voters head to the polls, many economies are continuing to grapple with a number of challenges, including - geopolitical conflicts, climate emergencies, recovering from covid and economic downturns.
Many countries and territories are still recovering from the impact of the COVID pandemic, during which significant budgetary deficits were created, and these states need to decide how this gap can be bridged, with tax increases being a tempting option for many governments. Countries and territories are struggling with high interest rates, which have increased the cost of borrowing money. Moreover, geopolitical conflicts and global trade disruptions have further increased inflationary pressures on government finances.
2024 is also the first year that the Pillar 2 GLOBE rules came into force in several countries, which had previously agreed to the framework and managed to implement it in their domestic legislation prior to January 1, 2024.
Our recommendations include:
Given the uncertain economic and legislative outlook, the need for governments to reduce their deficit and possible change in government control in many countries are likely to result in legislative initiatives to raise taxes in many jurisdictions. Businesses and individuals should follow closely the developments to be aware of possible changes. Adaptability, agility, and proactivity should be required traits for businesses and individuals in 2024.
There is a continuing pressure on supply chains and on the global infrastructure. This pressure may intensify if geopolitical uncertainty continues. Being flexible and creative will help businesses continue to prosper. In this environment, all aspects of the supply chain changes should be considered in the context of customs duty, indirect and corporate taxes.
Well capitalized businesses have the potential to withstand the possible turbulence of 2024 and following a robust strategy are able to navigate the uncertainty of the coming months.
We remain firm in our position reflected in A delicate balancing act between impact and taxation. In this report, we advocate that governments should support the resilience, adaptability, innovation and long-term focus of private companies. This should be done by setting tax positive fiscal policies that aim to encourage and incentivize private companies to increase their business activities, with less reliance on corporate and personal tax increases for achieving their goal. This could be especially important as many governments, look for growth strategies in their economies and look to agile growth- focused private businesses with the right tax incentives to help them achieve this.
What steps can be taken now?
Tax is at the forefront of government and regulatory change, it drives decisions on policy, trade, strategy and business transformation. As KPMG Private Enterprise tax advisors, we believe that taking a proactive review and adopting sound tax strategies are now more crucial than ever as private companies around the world face new opportunities and challenges arising from the outcome of the global elections.
I would be pleased to hear from you at any time at mike.linter@kpmg.co.uk to learn more about your company’s strategic business and tax priorities and I invite you to visit the private enterprise tax website for further insights on navigating the ever changing tax landscape.
Authors
Nike Olakunri
Senior Manager, Markets & Channels, Global KPMG Private Enterprise Tax & Legal
KPMG International
