Friday , July 4, 2025 |   09:20:59 IST
INTL TAXATION INTL MISC TP FDI LIBRARY VISA BIPA NRI
About Us Contact Us Newsletters
 
NEWS FLASH
 
I-T - Reimbursement of client related expenses paid to wholly owned principal company abroad, are not subjected to withholding tax u/s 195: ITAT (See Breaking News) TP - TPO must provide opportunity to assessee to substantiate existence and nature of remibursement expenditure alongwith benefit of such expenditure to assessee: ITAT (See Breaking News) I-T- Expenses, incurred for the welfare of key managerial personnel, qualify as business expenses allowable u/s 37 of the I-T Act, 1961: ITAT (See Breaking News) TP - Amount of receivable from AE and non-AE does not decide credit period given to AE, and question of imputing interest arises only when assessee provides extra credit period to AE: ITAT (See Breaking News) TP - Once foreign travel expenses are included in cost base & recovered from AE with markup, they form part of operating expenses under APA: ITAT (See Breaking News) TP - Absence of segmental data for various streams of revenue calls for exclusion of comparable, if entity was having revenue from multiple service lines: ITAT (See Breaking News) TP - While drawing segmental details, TPO ought to consider revenue of segments and cost that was allocated to respective segments: ITAT (See Breaking News) I-T - DRP proceedings did not contain valid DIN and assessment order also does not contain DIN, then assessment order would be invalid: HC (See Breaking News) I-T- Once assessee had disputed stamp duty valuation & provides credible material including earlier departmental valuation, then AO is obligated under the third proviso to Section 56(2)(x) r/w Section 50C(2) to refer the matter to Valuation Officer: ITAT (See Breaking News) I-T - Consideration for Health Ecotox services did not qualify as FTS under India-Netherlands Tax Treaty, if ‘make available' clause is not satisfied: ITAT (See Breaking News) TP - Functional dissimilarities and impact of extraordinary events like amalgamations, calls for rejection of comparables for purposes of benchmarking: ITAT (See Breaking News) TP - Benchmarking of operating results from international transactions of rendering software development and related services to AEs as well as non-AEs by applying TNMM, can't be disregarded on account of lack of segmental reporting: ITAT (See Breaking News) DTAA - Fabrication charges for bushings were not taxable as FTS under Article 12(4)(a) of India-Singapore DTAA where no technical knowledge or expertise is made available or transferred: ITAT (See Breaking News) OECD to release Tax Inspectors Without Borders' 10-yr Report CBDT notifies Protocol amending India-Oman DTAA TP - Cognizance taken by AO u/s 92CA is invalid, if it has been omitted from statute itself: ITAT (See Breaking News) TP - Internal TNMM is more superior than external TNMM, more so when audited segmental are available: ITAT (See Breaking News) TP - Interest payable on NCDs whivh are denominated in Indian currency is to be benchmarked by applying PLR as against LIBOR: ITAT (See Breaking News)
 
TII SEARCH
 
 
   
Home >> News Brief
 

Covid-led disruptions decreased OECD tax wedge in 2020
By TII News Service
Apr 29, 2021 , Paris

    

THE COVID-19 crisis has resulted in the largest decrease in taxes on wages since the global financial crisis of 2008-09, according to a new Organisation for Economic Cooperation and Development (OECD) report released on Thursday.

The tax wedge, a primary indicator that measures the difference between the labour costs to the employer and the corresponding net take-home pay of the employee, declined for single workers in 29 of the 37 OECD nations, found the ‘Taxing Wages 2021’ report.

Declining household incomes coupled with tax reforms linked to the pandemic are driving widespread declines in effective taxes on wages across the OECD as record falls were noted, comparable to the global financial crisis.

The tax wedge for a single worker at the average wage was 34.6 per cent in 2020, a decrease of 0.39 percentage points from the previous year. This is a significant fall, but is smaller than the decreases seen in the global financial crisis – 0.48 percentage point in 2008, and 0.52 percentage points in 2009.

The tax wedge increased in seven of the 37 OECD countries over the 2019-20 period and fell in 29, mainly due to lower income taxes.

The drop in the tax wedge was even more significant for households with children, bringing tax rates on these family types to new lows. The average tax wedge for a one-earner couple at the average wage with children in 2020 was 24.4 per cent, a decrease of 1.1 percentage points versus 2019. This is the largest fall and lowest level seen for this household type since the OECD started monitoring this in 2000.

Between 2019 and 2020, the tax wedge for this household type decreased in 31 countries, and rose in only six. It decreased by more than 1 percentage point in 16 countries. The largest decreases were in Lithuania, the United States, Poland, Italy, Canada and Korea. The only increase over 1 percentage point was in New Zealand.

The gap between the OECD average tax wedge for the single average worker (34.6 per cent) and the one-earner couple with children (24.4 per cent) has widened by 0.7 percentage points since 2019, reflecting policy changes that provided additional support to families with children during the COVID-19 crisis.

The falls in country tax wedges for the single worker, the one-earner couple with two children, and the single parent resulted predominantly from changes in tax policy settings, although falling average wages also contributed in some countries. "By contrast, increases in the tax wedge were almost all driven by rising average wages, offset only slightly by policy changes," said the report.

Of the 10 countries where specific COVID-19 measures affected the indicators, support was primarily delivered through enhanced or one-off cash benefits, with a focus on supporting families with children.

The report shows that labour taxation continues to vary considerably across the OECD, with the tax wedge on the average single worker ranging from zero in Colombia to 51.5 per cent in Belgium.

 
 
INTL TAXATION INTL MISC TP FDI LIBRARY VISA BIPA NRI TII
  • DTAA
  • Circulars (I-T Act, 1922)
  • Limited Treaties
  • Other Treaties
  • TIEAs
  • Notifications
  • Circulars
  • Relevant Sections of I-T Rules,1962
  • Instructions
  • Administrative Orders
  • DRP Panel
  • I-T Act, 1961
  • MLI
  • Relevant Portion of I-T Act,1922
  • GAAR
  • MAP
  • OECD Conventions
  • Draft Guidelines
  • DTC Bill
  • Committee Reports
  • FATCA
  • Intl-Taxation
  • Finance Acts
  • Manual on EoI
  • UN Model Taxation
  • Miscellaneous
  • Cost Inflation Index
  • Union Budget
  • Information Security Guidelines
  • APA Annual Report
  • APA Rules
  • Miscellaneous
  • Relevant Sections of Act
  • Instructions
  • Circulars
  • Notifications
  • Draft Notifications
  • Forms
  • TP Rules
  • APA FAQ
  • UN Manual on TP
  • Safe Harbour Rules
  • US Transfer Pricing
  • FEMA Act
  • Exchange Manual
  • Fema Notifications
  • Master Circulars
  • Press Notes
  • Rules
  • FDI Circulars
  • RBI Circulars
  • Reports
  • FDI Approved
  • RBI Other Notifications
  • FIPB Review
  • FEO Act
  • INTELLECTUAL PROPERTY
  • CBR Act
  • NBFC Report
  • Black Money Act
  • PMLA Instruction
  • PMLA Bill
  • FM Budget Speeches
  • Multimodal Transportation
  • Vienna Convention
  • EXIM Bank LoC
  • Manufacturing Policy
  • FTDR Act, 1992
  • White Paper on Black Money
  • Posting Policy
  • PMLA Cases
  • Transfer of Property
  • MCA Circular
  • Limitation Act
  • Type of Visa
  • SSAs
  • EPFO
  • Acts
  • FAQs
  • Rules
  • Guidelines
  • Tourist Visa
  • Notifications
  • Arbitration
  • Model Text
  • Agreements
  • Relevant Portion of I-T Act
  • I-T Rules, 1962
  • Circulars
  • MISC
  • Notification
  • About Us
  • Contact Us
  •  
     
    A Taxindiaonline Website. Copyright © 2010-2025 | Privacy Policy | Taxindiainternational.com Pvt. Ltd. OPC All rights reserved.