Global Daily Tax News, OECD Releases Annual Tax Policy Reforms Report, (Sep 12, 2025)

The OECD has released its annual Tax Policy Reforms report, covering changes introduced or announced in 2024 in 86 member jurisdictions of the BEPS Inclusive Framework.

Now in its tenth year, the publication provides not only an overview of tax policy changes in the jurisdictions but also explores the rationale behind the changes in addressing short- and long-run structural challenges. It tracks tax policy developments over time and describes the latest tax reform trends.

Introducing the report, the OECD said: "With 2023 marking a turning point away from the broad tax relief measures seen during the pandemic and the subsequent period of inflation, this trend solidified in 2024 with a mix of rate increases and targeted tax support across all major tax types. High levels of debt coupled with significant emerging spending needs relating to climate change, ageing and, in some countries, increased defence spending, has meant that jurisdictions of all income levels have adopted strategies to mobilize more revenues. Some have opted to raise standard value added tax (VAT), corporate income tax (CIT), or personal income tax (PIT) rates, as well as health and environmentally related taxes. Others have pursued more targeted approaches to increase tax revenues, including the introduction of temporary or permanent excess profit taxes or surtaxes. These measures vary in scope, with some countries levying them on specific sectors, highly profitable firms, or directly on excess profits themselves."

In 2024, PIT and social security contribution (SSC) reforms increasingly reflected a balance between revenue-raising objectives and targeted support measures, the OECD said. More jurisdictions raised top PIT and capital income tax rates than in previous years, often to generate revenue or enhance tax progressivity.

While base-narrowing measures continue to be used to alleviate cost-of-living pressures, support measures in 2024 became more targeted and less reliant on broad relief compared to the response during the energy price crisis, the OECD said. Countries also expanded relief for young workers, families, and the elderly. Meanwhile, SSC rate increases remained widespread amid rising health and ageing-related spending, while SSC base reforms were more balanced.

Base-broadening measures focused on increasing maximum contribution thresholds and expanding the range of covered income, whereas SSC base-narrowing measures targeted specific types of workers or sectors to stimulate labor force participation.

Signs that the downward trend in CIT rates has halted or is reversing grew stronger in 2024, the OECD reported, with more jurisdictions increasing rates than reducing them for the second consecutive year.

The OECD said while many governments continued to prioritize support for investment, there was a notable pivot towards revenue mobilization, particularly through rate increases. Nonetheless, base narrowing measures were common, the report says, as governments continued to offer tax incentives for investments, particularly in research and development, clean technologies, and strategic sectors.

While the use of reduced VAT rates as a policy instrument remained widespread in 2024, their role continued to shift from crisis management towards more targeted objectives. Many jurisdictions expanded or extended VAT relief on essential goods and services – such as food, energy, health, housing, and childcare – primarily with the stated objective of addressing equity and cost-of-living concerns. However, as inflationary pressures eased, a number of countries began scaling back temporary VAT cuts introduced during the pandemic and subsequent energy price crisis.

At the same time, revenue mobilization objectives prompted several countries to raise their standard VAT rate.

Finally, health excise tax reforms continued to gain momentum as a tool to both mobilize revenue and support public health goals, with many jurisdictions increasing taxes on tobacco, alcohol, and sugar-sweetened beverages.

Another notable shift in 2024 was the move away from temporary fuel tax reliefs towards increases in fuel excise taxes.

At the same time, high-income countries also continued to strengthen explicit carbon pricing for the second consecutive year, with several increasing carbon tax rates or expanding their scope to include new sectors, such as international shipping and agriculture.

Additionally, the use of tax policy to support the transition to a low-carbon economy continued to broaden. Governments combined carbon pricing with targeted tax incentives, including reduced VAT rates for goods and services linked to environmental sustainability, PIT relief for sustainable transport, and CIT incentives for clean investments.

Property tax reforms predominantly focused on rate cuts and base-narrowing measures. Most measures sought to ease the tax burden on households, make housing more affordable, simplify property tax systems, and encourage investment. Where property tax increases did occur, they were primarily driven by the need to raise revenue and address equity or fairness concerns, the report says.