Greetings and Happy Tuesday! This is Tax Roast, a weekly newsletter that brings you the latest updates and insights from the international tax world from tax experts (and coffee enthusiast) who are walking the tax advisory path.

And do not forget to check out our coffee of the week, because there is no tax news without a good cup of coffee :)

International Tax Update

United States / Michigan increases flow-through tax

Michigan has increased the flow-through entity (FTE) tax from 4.05% to 4.25% for tax year 2024. This was announced through a notice dated 20 March 2024. Michigan levies the FTE tax at the same rate as that levied on persons other than corporations under section 51 of the state's Income Tax Act, and that the Department previously issued notices announcing that the rate in effect for 2024 is 4.25%

Netherlands / MoF expects no significant impact of Pillar 2 on Innovation Box

In a letter released earlier this month, the Dutch Ministry of Finance has stated that it expects the number of taxpayers applying the innovation box that will face a top-up tax to be minimal.Under the innovation box, qualifying income derived from qualifying assets is subject to an effective tax rate of 9% instead of the regular corporate income tax (CIT) rate of 25.7%. Under the minimum taxation rules, a top-up tax may be levied on the profits where these are not subject to an effective minimum tax rate of 15%. As such, questions arose in the parliament as to whether the innovation box would still be relevant.

Ecuador / VAT rate increase

Ecuador has published, in the Official Gazette, the Law to Face the Internal Armed Conflict, the Social and Economic Crisis (Ley Orgánica Para Enfrentar el Conflicto Armado Interno, la Crisis Social y Económica), which includes an increase in the VAT rate to 13%

Australia / Pillar 2 draft legislation released

The Australian ministry of finance has released the draft legislation for Pillar 2. The draft legislation is - at this stage - for consultation purposes with the consultation period running until 16 April 2024.

Fun Tax Fact :)

Global minimum tax / Pillar 2 bootcamp

The effective tax rate (ETR) for each jurisdiction is computed based on the ratio between the aggregate amount of adjusted covered taxes of all constituent entities in a jurisdiction and the aggregate amount of net qualifying income of all constituent entities in the jurisdiction.

The amounts of net qualifying income and adjusted covered taxes are computed starting with the values in the financial statements used for consolidation purposes, before any elimination of intragroup transactions, and would be adjusted according to specific rules provided in the respective domestic rules.

Please bear in mind that depending on the Group’s perimeter and sub-groups more than one calculation of ETR is necessary for a given jurisdiction.

Leadership principles for top managers at Big Multi Inc. 🏢

Rule #10 - Honesty trap

Welcome to another edition of our weekly newsletter, where we delve into the unspoken truths of the corporate world. This week, we're tackling a delicate topic: what managers must never tell their superiors, and what they should actually communicate instead. So grab your coffee, sit back, and let's dive in!

1. The "Honesty trap": we all know that sometimes things go haywire and chaos ensues, and of course it’s the fault of the people around you, because they don’t follow your wise advices. However, when your superior notices the situation, you need to resist the honesty trap of disclosing everything. Instead, just say that you are in the transition period for introducing the new paperless policy.

2. The "I Have No Idea What You're Talking About" Dilemma: We've all been there, nodding along in meetings while secretly googling acronyms and jargon that make no sense. But here's a tip: instead of admitting that you don't understand something, start using the same acronyms in different sentences, and see if by other people’s reaction you can figure out the meaning. Don’t forget, there is always a TPS report in every organization.

3. The "I Can Handle It All" Fallacy: As managers, it's easy to fall into the trap of thinking we can handle every task and responsibility that comes our way. But you reached this position because you have already mastered the skill of delegation and understood that your team is there with the sole purpose to work instead of you… ahm, together with you.

Tax Roast of the week

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Coffee corner

In the realm of coffee connoisseurs, there exists a rare and coveted brew that commands an exorbitant price tag, captivating the attention of enthusiasts and curious onlookers alike. Known as the world's most expensive coffee, this extraordinary beverage is not merely a product of its taste, but rather a result of an intricate and labor-intensive process. Grown in the lush highlands of Southeast Asia, the coffee cherries are meticulously handpicked by skilled farmers, who select only the ripest and most flavorful beans. However, what truly sets this coffee apart is the unique journey it undergoes within the digestive system of a small mammal, the Asian palm civet.

The Asian palm civet, a nocturnal creature, feasts on the coffee cherries, digesting the fruit but leaving the coffee beans intact. After being excreted, these beans are meticulously collected, thoroughly washed, and meticulously roasted to perfection. This intricate process, combined with the limited supply and high demand, contributes to the exorbitant price of this coffee. The resulting brew boasts a distinct flavor profile, characterized by its smoothness, low acidity, and a hint of chocolate undertones. While the price may seem extravagant to some, the allure of experiencing this rare and unique coffee is enough to captivate the senses and ignite the curiosity of coffee enthusiasts worldwide.

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DISCLAIMER: None of this is financial or tax advice. This newsletter is strictly educational and is not investment or tax advice or a solicitation to buy or sell any assets or to make any financial or tax decisions. Please be careful and do your own research.
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